Why is now the right time to buy a Home?
Why is now the right time to buy a home in the Metro Denver Area?
Let me give you 3 solid reasons:
1. Mortgage Rates – Mortgage rates have not been this low since September 2017 – almost 2 full years. Back in late 2018, mortgage interest rates were flirting with 5% and many industry experts thought that number would just continue to rise. The fact that we are back under 4% is huge and a gift to home buyers this summer season. Keep in mind that since mortgage interest rates fluctuate on a daily basis, there is no guarantee of how long we will stay under 4%.
Let’s compare the savings between a 5% interest rate and a 3.875% (the quote on 07/02/19):
Difference Between a 5% Mortgage and a 3.875% Mortgage
$500,000 Loan Amount
P.I.* @ 5%
P.I.* @ 3.875%
Monthyly Savings
- PI references Principal & Interest on a loan. You may have heard of PITI which references Principal, Interest, Taxes & Insurance. Taxes & Insurance vary from County to County and the age of the home. They can’t be generically calculated until you find your home.
- This estimate is also based on a 30 Year mortgage. If you are presently looking at a 15 year mortgage, interest rates are lower. Also, if you are looking at a 5/1 ARM, interest rates are currently lower.
Difference Between a 5% Mortgage and a 3.875% Mortgage
$400,000 Loan Amount
P.I.* @ 5%
P.I.* @ 3.875%
Monthyly Savings
- PI references Principal & Interest on a loan. You may have heard of PITI which references Principal, Interest, Taxes & Insurance. Taxes & Insurance vary from County to County and the age of the home. They can’t be generically calculated until you find your home.
- This estimate is also based on a 30 Year mortgage. If you are presently looking at a 15 year mortgage, interest rates are lower. Also, if you are looking at a 5/1 ARM, interest rates are currently lower.
Difference Between a 5% Mortgage and a 3.875% Mortgage
$300,000 Loan Amount
P.I.* @ 5%
P.I.* @ 3.875%
Monthyly Savings
- PI references Principal & Interest on a loan. You may have heard of PITI which references Principal, Interest, Taxes & Insurance. Taxes & Insurance vary from County to County and the age of the home. They can’t be generically calculated until you find your home.
- This estimate is also based on a 30 Year mortgage. If you are presently looking at a 15 year mortgage, interest rates are lower. Also, if you are looking at a 5/1 ARM, interest rates are currently lower.
Will interest rates go lower? Possibly.
No one really knows, but the gift has been given.
As you can see from above, the savings are there. $332 on a $500,000 mortgage helps a lot. It decreases as the loan amount goes down, but the savings are definitely there.
Let’s jump into Reason #2:
2. Inventory – Home inventory has been slowly creeping up. This has been a sellers market for the last 5-6 years, but now it is dependent on the price range. If you are looking to buy something under $5000,000 , it is still a pretty solid sellers market. If you are above $500,000, then it softens. I won’t got as far to say that it is a buyers market, but it is better. As an example, new listings in Denver County have increased 9.9% year to date from May 2018 to May 2019. (June figures come out on July 10th).
Of note, I still believe that inventory levels are still low even though they are increasing in all of the 5 Metro Denver Counties.
This now leads me into Reason #3:
3. Days On Market – Here is another good sign for buyers. Homes are staying on the market a lot longer than they used to. This means that you now have some breathing room to make your offer and not worry that there are 5 other offers that you have to compete with. As a side note, if a property is aggressively priced, then this may still happen. However, in Denver County, year over year the days on market have increased 28%.
The bottom line is that interest rates are great, inventory is getting better and the competition is lower.
If there isn’t a better time to buy a home, then I really don’t know when it will be.
Thanks for reading. Call Sean Reilly @ 303.520.8700 if you are looking for professional representation.