The market across the NoCO and especially Fort Collins has roared back to life in the last few weeks.
Mortgage rates are now at 6.2%. We have felt a lot more buyers come back into the market since rates have fallen into that range. The number of new listings coming on the market right now is lower than it has ever been. However, the number of homes sitting on the market is 127% higher than last year. Buyers must be patient. Be prepared to search over a time span of multiple months. Longer searches have advantages. It helps buyers learn the market and builds their confidence so they know when the right one comes. We also find that it helps them understand how active the market is and gives them confidence in the stability and resiliency of prices. They get to see homes that they have walked through go under contract and sell at certain prices. Essentially they become market experts in the property type that they’re considering. When buyers sit on the sidelines and read headlines, they get analysis paralysis. But when they actively search and learn, they gain confidence to be decisive and know when they’ve found the right one.
Growing families that need a larger home want certainty when planning their move.
We interviewed our “upsizing” clients and here’s what we learned…
How much are mortgage closing costs? Here’s a good rule of thumb. ⬆️
Remember that your closing costs will change based on the interest rate you choose.
Also remember to shop lenders. Costs can vary wildly between different mortgage providers.
What can be done about the housing shortage in Northern Colorado? Allowing homeowners to legally rent out a carriage house or basement apartment would be a good start. It’s virtually impossible to find a home with zoning that allows this, many owners do it illegally which encourages unsafe living conditions, ie, lack of proper egress. The city and county are concerned about parking and changing the character of neighborhoods, but even if you have a 40 acre property outside of town, Larimer County’s most common rural zoning prohibits you from renting out a second unit unless you are housing agricultural workers. I think it’s time to change this and open up more affordable housing units for our community. What do you think?
I've been fielding this question a lot latley...
Should I buy now or wait to see if rates fall further? The advantage of buying now is negotiating power, I looked at a home with a client this weekend, we agreed that we were getting about a $30,000 discount because we have to pay today's 6.2% interest rate. So, we started to run a scenario. Let's assume rates will drop 1% over the next year. So if you bought this house next year, that $500k mortgage would be $5,000 cheaper per year but the market would likely heat up. So that $30k discount might be gone, but if you locked in the discount today and could refinance next year, even though you had to pay $5,000 more while you wait to refi, you'd come out ahead, assuming that discount disappears. You're also going to pay down your mortgage by a $5k over that year, but you're going to have to pay $5K to refinance. So those things off set. Of course, this is all speculation. You've got to be comfortable with your payment if rates don't come down. But one thing is for sure, high interest rates are not solving the housing shortage. Buyers were getting squeezed when rates were low because a bidding wars, they're getting squeezed now because of high rates. There’s no free lunch. At some point. You have to jump in with the mindset that you are holding this property for 10 years or ideally forever. And regardless if you buy now or next year, things are going to work out. Even if you didn't buy at the bottom and prices fall further, you have the mindset that you're not selling this home. Even if you have to leave town, you rent the house, you don't sell it.
The listing price you choose in combination with the marketing your home receives will have a dramatic impact on the time you spend on the market and the price you ultimately receive. Your realtor should be able to tell you how different prices will affect the amount of time you spend on the market. Also, your home should not only be listed on MLS and Zillow, but also on social media which can easily bring tens of thousands of additional views to your listing in your target market.
Despite 7% mortgage rates and more doomsday headlines than you can count, the market remains active enough to keep prices stable. In August our median price fell about 4%, then ticked back up slightly in September and basically remained unchanged in October.