As predicted, for the first time since the financial crisis of ‘08, the Feds raised the short-term interest rate by around .25%, and announced that it would be raising the rate by around 1% per year for the next 3 years. And whereas it’s expected that mortgage interest rates will remain low for the foreseeable future, we saw a jump of between .25% and .5% in 30-yr fixed mortgages overnight after the announcement. Surely 6% is considered very low interest for a 30-year fixed mortgage, but when compared to the near 3.5% rates buyers have enjoyed for the past several years, will home-buyers experience sticker shock?

I’ve already seen some of my Buyers knocked down a price bracket. And when prices are still climbing, that’s the wrong direction. Based on a Buyers Debt-to-Income ratio, if a mortgage is going to cost more in interest, the payments will be higher. If the payments cause that Buyer’s monthly Debt to jump in comparison to their Income (above Fannie or Freddie’s acceptable ranges), Buyers are forced to buy a home with a lower purchase price. As rates increase, your buying power will decrease.

If you’re a Seller, there will be fewer Buyers in your price range. A lessening demand in higher price ranges eventually slows down the market. We’ll see fewer multiple offer scenarios, more days on market, and ultimately, lower sale prices.

Boulder Market Update:

Inventory is way down and  will continue to drop greatly. Listings may be up 4.3% for SFH, but Pendings are up almost 25%. Solds are down half as much as Inventory (i.e., SFH Solds were -16.6% as compared to Inventory’s -31.8%), so that’s another indication of tightening inventory. Median price is up by 10% across the board, and things are still selling at or above asking price. Depending on the price range, homes are selling faster than they did last year.

Bottom line? With Google inbound and plenty of businesses in need of new manpower, demand continues to rise for the Boulder market. With supply dropping, prices – for sale and rentals – will continue to rise. If you qualify, it’s a better deal to buy vs. rent in this market.


Denver Market Update:

Inventory and Listings are up across the board. While SFH Pendings are up a few percentage points more than the rise in Listings (14% vs. 11%), the ATD Pendings are 10% vs. Listings 26%. This 16% difference points to the Denver condo market softening in values. Overall, Solds are down 16.2% and Prices up 14%. Now that the interest rates have increased, and the Inventory is growing, there should be a flattening in demand.

Bottom line? Supply is up, and demand is showing signs of dropping. Sell now, before the demand lessens. And if you’re looking to buy, it’s already gotten MUCH easier than it was just 6 months ago.

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