Interest rates on a 30-year mortgage right now are just about the lowest they have ever been in history.

• The rate today is 3.45%
• The lowest-ever in November, 2012 was 3.31%
• A year ago they were 4.35%

So, what gives? Why are rates so low? It turns out that the coronavirus is pushing rates down to historic lows.

The virus is causing uncertainty in the global financial markets. When there is uncertainty, there tends to be a flight from stocks into bonds.

Specifically, there tends to be a flight to U.S. Treasuries.

High demand for U.S. Treasuries means that the interest rates on those bonds goes down.

30-year mortgage rates track the rates on the 10-year Treasury and the 10-year Treasury just hit their lowest rates ever at 1.31%.

The uncertainty around the virus will likely keep rates down for the foreseeable future.

If you haven’t done so already, we encourage you to reach out to your mortgage lender to see if you would benefit by refinancing your loan.

Every so often we will hear a concern that another housing bubble is forming.

To help answer that question it’s valuable to look at the reasons that caused the last one.

There were three main drivers of the bubble that burst in 2008:

1. Easy Credit – loans were very easy to attain
2. Over-Leverage – people were using their homes at ATM’s
3. Over-Supply – too many new homes were being built

Now, let’s compare that to today:

1. Stricter Credit – the average home buyer today has a FICO score of 755
2. High Equity – collectively, U.S. homeowners have $19 Trillion of equity in their homes and collective mortgage debt has not increased for 13 years
3. Under-Supply – today we are building only two-thirds of the new homes being built in 2004 yet the population is much higher

Given this healthy information, we don’t see another housing bubble forming today.

In honor of Valentine’s Day, here are some Northern Colorado stats we think you will love:

• Prices are up 3.5% compared to last year
• Inventory is up 10% which means there is more selection for buyers
• We just had the most active January in terms of closings in over 10 years
• Well over 13,000 residential properties representing $5.4 Billion of volume has sold in the last 12 months

Northern Colorado gave us a real-life economics lesson in January 2020.

Compared to one year ago…

• Inventory was down 10% (Supply)
• Homes under contract went up 31% (Demand)
• Prices were up 5% (Result)

Check out The Scoop all about the Northern Colorado real estate market below!

The Scoop 1st Quarter 2020

Housing affordability is a hot topic especially after the strong price appreciation that has occurred in our market over the last 7 years.

Here’s some interesting research on affordability…

Each quarter the National Association of Home Builders measures affordability in hundreds of markets across the Country.

Their method is to count the number of homes in a market that could be purchased with that particular market’s median income.

For example, San Francisco is the least-affordable market where only 8.4% of the homes could be purchased with their median income.

The most-affordable is Monroe, Michigan where 95.3% of the homes could be purchased with their median income.

Guess where all of the 10 least-affordable markets are. California!

Guess where almost all of the 10 most-affordable markets are. The rust belt (cities in Michigan, Ohio, upstate New York, etc.)

The U.S. average is 63.6%.

Metro Denver comes in at 55.3% and Northern Colorado at 54.5%.

So, roughly half of the homes in our market could be purchased with our local median income.

Here is our interest rate Forecast for the next year.

Our Chief Economist, Matthew Gardner, predicts that rates for a 30-year fixed mortgage will stay between 3.8% and 3.9% for 2020.

He doesn’t see rates going above 4.0% until at least the first quarter of 2021.

This is obviously great news for buyers as their payments will stay much lower as compared to having a rate at the long-term average of 7.5%.

If you would like to see the slides from Matthew Gardner’s Forecast presentation, we would be happy to get those in your hands. Just let us know if we can help!

Millennials often get a bad rap.  One of the myths about Millennials is that they don’t own homes and will be renters forever.

Not true!  Especially on the Front Range of Colorado.

Based on research by our very own Chief Economist, Matthew Gardner, Millennials make up a significant percentage of all home buyers in Metro Denver and Colorado.

In Metro Denver, 50% of all buyers last year were in the Millennial demographic.

In Northern Colorado, the number is 41%.

It turns out that Millennials, as they move into their mid to late 30’s, see the value of home ownership and are at the point in their lives where it makes sense to own instead of rent.

Ideal investment property! 2428 Crabtree Drive in Fort Collins is currently leased through May of 2020. Easy access to CSU, Old Town, and Horsetooth Reservoir. The owner has never had any issues with vacancy but would be great as an owner-occupied home with the layout and back yard as well. The home has wood floors and is in great shape. Come check it out today! Call for your private showing at (970) 673-7285 for more information or click the link below for more details.

http://windermerenoco.com/listing/104370583

A lot of real estate changes hands in Northern Colorado over the course of a year.

In 2019, Larimer and Weld Counties had…

• 12,830 residential sales which is 1.2% more than 2018
• $5,224,834,424 of sales volume which is 4.45% more than 2018

For a detailed look at all the 2019 numbers plus our forecast for 2020, click the link below…

It’s time to register for our annual Market Forecast event. We will be live at 5:30 on January 16th at the Marriott in Fort Collins. Back by popular demand is our Chief Economist Matthew Gardner. Save your seat HERE.