Will rising interest rates make less competition to buy a house next year?

In today’s blog, let’s break this down for the Denver Metro area.

The Mortgage Banker’s Association predicts that the 30 year fixed mortgage which is currently averaging 3.1% will rise to 4% by the end of 2022 and in turn push the median price of homes down.  Fannie Mae predicts that rates will only go up to about 3.3% and values will continue to rise another 7% or so through 2022.    Nobody is expecting rates to go down, so no matter how long you wait into 2022 the interest rate will be higher than it is today. 

The idea is that as rates rise, affordability goes down which means less people qualify for loans, making less competition for Buyers.   Nationwide and in some markets this may have some truth to it- however, In the Denver Metro area as of last month we only had 2 weeks of inventory.  The be considered a fair or balanced market this needs to go higher than 6 months. 

With the demand we are still seeing, even a moderate rate increase isn’t going to turn us into a Buyer’s market any time soon.     

My advice for anyone considering purchasing in 2022:

• Don’t let a small rate increase of most likely less than .5% scare you off from buying, even with a moderate increase; rates are historically low
• Rents are also rising, so consider the cost to you by not buying and start earning equity for yourself and not your landlord
• Meet with a reputable lender and really break down the options and numbers.  Are there any grants or rate buy-down programs available to you?  What is the payment difference between conventional and FHA and run the scenario for different down payments amounts
• Pay off any unnecessary debt that you can
• Meet with a Realtor and let them show you what types of properties are in your price range.  You might be surprised!

As with everything Real Estate, there is no crystal ball where we can predict everything ~ but if you’ve been on the fence about buying I hope some of this information helps- and as always I’m always available for a chat!

Appraisals in a Seller’s Market-should they matter?

Appraisal: An appraisal is the estimated value of a home determined by an inspection of the property and its comparison to recently sold homes in the area to estimate the value

Real Estate agents use the most recent sales in a neighborhood to help determine how much a home will most likely sell for, and lenders use appraisals to determine that the amount of the Buyer’s loan does not exceed the value of the home.

Now, with more than half of homes in the Denver area selling for above list price, to compete Buyers are faced with needing to increase their down payment amount to make up the difference between the appraised value and their actual purchase price. This means hundreds of homes are purchased for more than what an appraiser said they were worth and Buyers are bringing extra cash to closing.

The question is- Should something be worth what someone is willing to pay?

If a Buyer qualifies for the amount they want to spend and have made a decision that a particular property is worth that much to them, should the appraisal matter?  

Some would say no, but as long as money is being borrowed for mortgages, appraisals will not be going away any time soon.   They are a protection for the bank or lender.  

As neighborhood values continue to increase, the sold prices are publicly recorded, whereas the value opinion on the appraisal is usually only available to the Buyer and their lender.  Demand and what consumers are willing to pay will ultimately drive appraised values more than actual appraisals.   More data will empower appraisers to value more homes at what consumers are willing to pay. 

As part of the real estate community, I continue to work with lenders who have an understanding of the current market conditions, have programs in place to help Buyers with their appraisal gap and we continue to advocate for Sellers and Buyers alike- because the ultimate goal is always to live someplace you love!

I recently decided to submit a tax abatement form and protest of my home's tax valuation and it worked!

Most counties send out assessments every 2 years and you are given a period of time to protest the assessment in writing, if you are between tax assessment periods you can also send in an abatement request for any year.

The best way to do this is:

1.  Determine if the county's assessment is actually high.  (this is easy to find, ask me!)

2. If it is, send a certified letter to the county listing out your reasons and include comparable sales to back it up.  The comparable sales need to be from the tax assessment period.  

3. Wait for a response!

In many cases, the home is actually assessed correctly, however if you do feel it's high go through the process!  After you send in your protest or abatement request you will receive a letter back with a date and time for a hearing (mine was an online conference) where an arbitrator, a county representative and you each get a chance to present your data.  Then a month or so after that you'll get a formal answer!

In my case, after presenting some sales and what some of my neighbors were paying for taxes they agreed and lowered my value and I'm getting a refund check for the overpayment of 2019 taxes.  

I'm here for any real estate questions you have!  Please feel free to reach out any time.