The S&P/Case Shiller numbers came out on June 25th and it’s no surprise that it shows the real estate market recovering nicely around Denver and the nation.
The Case Shiller Index is a leading indicator used to measure the value of residential real estate on a monthly or quarterly basis using a specific methodology of “repeat sales comparables.”
The data shows that home prices across the nation rose by 12% from April of last year to April of this year. In Denver, prices rose by 9.91% from last year. Most experts predicted that the nation would see a 10.6% increase, so the actual numbers beat the estimates. For those of us with boots on the ground, again, this is no surprise. Our team, “The Colorado Dream House” team, is averaging three to four sales per week and 10 to 12 closing per month. That’s really good considering that we specialize in the high-end market.
The question on everyone’s mind is – will this last? Buyers enjoyed all the leverage in the market from 2008 to March 2011. It started swinging the sellers’ way in April of 2011 and so for the last 27 months, sellers have had the upper hand. I think that sellers could be in the driver’s seats for another 18 to 24 months unless interest rates continue to climb. In case you haven’t noticed over the last 60 to 90 days, interest rates have gone from 3.5% to 4.3% on a 30-year fixed. For a buyer purchasing a $300,000 dollar home, that monthly mortgage just went up by about $140 per month. I know that everyone pays a lot of attention to rising home prices, but rising interests rates will cost you more in the long run every time.
If you are a buyer and have been hesitant on when to buy, don’t wait any longer. Rising interest rates and rising home prices are a double whammy. That $300,000 dollar home will be $325,000 before you know it, and the interest rate may even be 5%. People thought I was kidding when I told them that “the train is leaving the station” in March of 2011 when the market was turning.
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