How's The Market?
- The market is currently experiencing the most uncertainty since the Global Financial Crisis. Inventory is increasing nationwide and sales are slowing. Buyers are hesitating and sellers are reconsidering listing their homes.
On the ground, the impact is mostly at the lower end of the market, where buyers are sensitive to monthly payment costs. The upper end, where most buyers pay cash, appears to be holding strong. Why? Buyers who rely on a mortgages have experienced a massive reduction to their purchasing power. The most attractive properties are still selling briskly (see House Einstein's notable sales).
- As expected, the Fed raised the benchmark discount rate 0.75%. While the relationship with this rate and long-term mortgage rates is not direct, it has an impact. We are advising our buyers and sellers to expect higher mortgage rates for the next 3 to 6 months, with a strong chance of rates dropping after that. This could mean attractive acquisition opportunities in the fall, but I expect they will disappear when the Fed begins cutting rates again.
- In Boulder County, sales volume for detached single family houses fell 27% for the first half of July, compared to the same period a year ago. Sales volume for condos and townhomes fell 13%, respectively.
- In Denver, sales volume for detached single family houses dropped 24% for the first half of July. Condo sales are off 8%.
- Leading indicator: Only 2 house listings were withdrawn during the first two weeks of July in Denver last year. This year? 37 sellers pulled the plug. In Boulder, zero house sellers withdrew their listings during this same time period last year. This year? 39 withdrawn listings. Keep in mind that while 39 listings represents a large increase, it's only 4.4% of inventory.
- Key question: How bad is the Fed engineered recession going to get?
Osman Parvez is the Founder and Employing Broker of House Einstein. Originally from the Finger Lakes region of New York, he lives in Boulder with his wife and their Labrador Retriever. He has been a Realtor since 2005.Osman is the primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has also appeared in many other blogs about Boulder as well as mainstream newspapers, including the Wall Street Journal and Daily Camera. For more information, click HERE.
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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties. House Einstein strongly recommends conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.
