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Not Taxing
Pop quiz…
Which state has the lowest effective property tax rates?
It’s not Colorado. But, if you guessed Colorado you’re close!
Hawaii has the lowest effective rate at .27%.
Colorado is ranked 3rd at .53%.
New Jersey is the highest at 2.47%
So, Colorado’s property tax rate is one fifth of New Jersey.
It’s also one third of Michigan and Ohio, and one half of Oregon and Washington.
The out of state clients we work with are usually pleasantly surprised that our local property tax rates are so much lower compared to where they are moving from.
It’s another benefit of owning real estate here.
At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed.
Rate Meaning
Mortgage interest rates have hit another record low this week.
Mortgage applications for purchases just hit an 11-year high.
Rates are at a level that many people could never have imagined.
Here’s something that is surprising to many people…
Rates are 1.5% lower than they were just two years ago.
Here’s what that means for buyers…
Pretend someone is looking at a $500,000 home and they will have a 20% down payment.
The difference in monthly payment is $320 between two years ago and today.
Obviously that is a significant amount of money.
Imagine what a person could do with $320 per month.
The fact that rates are at record lows is one of many reasons that the market is so strong right now and prices continue to appreciate at healthy levels.
Tight Inventory
The numbers that we find to be most interesting right now are all related to inventory.
Long story short, inventory is tight.
It was already tight pre-coronavirus and now it’s even tighter.
Here are the numbers.
Active properties for sale versus one year ago are down:
11% in Larimer County
20% in Weld County
26% in Metro Denver
This low inventory is one of several reasons that prices are generally still up across the Front Range.
At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed.
Prices Still Up
It seems that COVID-19 did not cause prices to decrease and certainly didn’t cause them to crash.
Average prices are up compared to last year:
2.8% in Larimer County
5.4% in Weld County
3.3% in Metro Denver
Low supply, sustained demand, and incredibly low interest rates are all fueling the price growth.
At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed.
On Sale
On Sale
Money is on sale (again).
30-year mortgage rates now sit at 3.3%.
This is less than half of the long-term, 40-year average.
This is also almost a full percentage point lower than they were one year ago (which was still very low).
Let’s put this in real numbers.
A $300,000 loan at today’s rates has a $1,313 monthly principal and interest payment.
One year ago, that same loan would be $1,432 per month.
That’s a 8.3% difference in monthly payment.
The fact that money is on sale is one of many reasons that the housing market remains very strong right now.
At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed.
Faster
Here’s something true about today’s market. Properties are selling fast.
Compared to one year ago, the number of days it takes for a property to sell is significantly lower.
The industry term is “Days on Market” or DOM.
DOM is way down.
Here is the comparison of May 2020 versus May 2019:
• Metro Denver down 22%
• Larimer County down 19%
• Weld County down 16%
Initially, this may seem counter-intuitive. How could homes be selling faster in today’s environment?
Here’s the deal. The buyers and sellers who are active in today’s market are serious.
There really aren’t ‘tire-kicker’ buyers out looking at properties just for the fun of it.
There really aren’t sellers testing the market to ‘see what they can get.’
For the most part, buyers and sellers are on a specific mission and this mindset is showing up in the numbers.
For sellers especially, this is no time to test the market and be overly aggressive on price.
Properties that are priced right and in good condition are selling and often selling fast.
At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed.
What the Numbers Say
April represents the first time we can look at the impact of COVID-19 on a full month of real estate activity.
To no one’s surprise, activity in April in terms of closings and new contracts did slow significantly.
Much of this slowing was caused by in person showings not being allowed for most of the month. (showings are now allowed again by following Safe Showings protocols)
Here’s what the numbers say…
Closed transactions were down compared to April 2019
• 26% in Northern Colorado (Larimer & Weld)
• 27% in Metro Denver
New written purchase agreements were down compared to April 2020
• 48% in Northern Colorado
• 44% in Metro Denver
So, while activity did slow, there was nothing resembling a “screeching halt” that took place.
While the way property is shown has certainly changed, the market is still very active and we expect activity to increase even more with showings now being allowed again.
Why No Crash
This week we hosted our clients and friends for a special online event with our Chief Economist Matthew Gardner.
Matthew talked about a variety of topics that are on people’s mind right now including home values.
Matthew sees no evidence that home values will crash and actually sees signs that they may rise this year nationally.
Here’s why he says this:
• Mortgage rates will remain under 3.5% for the rest of the year so there won’t be any interest-rate pressure on prices
• Inventory, which was already at record-lows, will drop even further keeping the supply levels far below normal
• New home construction will continue to be under-supplied and will be nothing like the over-supplied glut of inventory that we saw in 2008
• The vast majority of employees being laid off and furloughed are renters
• Home owners have a tremendous amount of equity in their homes right now compared to 2008 which will prevent an influx of short sales and foreclosures
If you would like to receive a recording of the webinar we would be happy to send it to you. Feel free to reach out and ask for the link.
Inventory Drop
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Leading Indicator
We are watching close to see where the real estate market is headed. Anecdotally we can tell you that the vast majority of transactions that are under contract are still closing. We have seen very few transactions cancel because of employment issues or the wild swings of the stock market.
An interesting leading indicator was announced this week that sheds some light as to where the market is headed. Each week the Mortgage Bankers Association releases their index which tracks new mortgage applications.
They track both purchase applications and refinance applications. To no one’s surprise, the index was down this week but not as much as you may have guessed.
New purchase applications were down 11% compared to the same week this last year. Refinance activity fell more sharply, down 34%.
This is a statistic we will watch closely as time goes on.
Each week our Chief Economist produces a video with the latest on the national economy and the housing market. Reach out to us if you would like to see that video.
