Posts Tagged Real estate trends
Activity Picks Up Across the Valley Driven by Lower-end Properties
Wildridge sales are steady but the real story is the explosion in the lower-end of the market. Sales and under contract properties in the under $1 million market are hot.
Click on the links below to view the latest market update and the current listings and 2011 sales in Wildridge.
Fall is in full session across the Valley but winter is fast approaching. We’ve already seen snow and three ski areas are open. It’s about time to pull those skis and snowboards out of storage.
By Ruth Mantell
WASHINGTON (MarketWatch) — The average rate on the 30-year fixed-rate mortgage declined to 4.71% in the week ending May 5, hitting the lowest level since January, down from 4.78% in the prior week, according to a survey released Thursday by Freddie Mac, a buyer of residential mortgages. Last year, the rate was at 5.00%. To obtain the latest rate, payment of an average 0.7 point was required. A point is 1% of the mortgage amount, charged in prepaid interest. “Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” said Frank Nothaft, chief economist at Freddie Mac, in a statement. The rate for 15-year fixed-rate mortgages averaged 3.89% in the latest week, down from 3.97% in the prior week. The rate on the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.47%, down from 3.51%. The 1-year Treasury-indexed ARM averaged 3.14%, down from 3.15%.
Note from TMN: This is good news although I expect rates to rise at QE2 ends this summer. Our current problem is not the rates themselves but the underwriter guidelines which continue to be very strict. We certainly needed some correction in the guidelines but the pendulum swung so far that it is nearly impossible even for well qualified buyers to find financing. We need a little more common sense from the lenders to revive the housing market.
Recently I’ve claimed there is some light at the end of the tunnel in the local housing market. It might be helpful to take a look at long-term trends in the Valley real estate market. Are we really climbing out of the huge hole we dropped into over the past four years? The graph below compares the annual number of real estate transactions versus population growth in Eagle County from 1990. The transaction numbers are from Eagle County and the population numbers are from the US Census.
First look at the red line which represents the number of transactions in Eagle County since 1990. Even though we have seen a nice reversal of the downward trend from 2009 to 2010, we are still well below the activity level we were seeing 20 years ago. We had nearly 2,000 transactions in 1990 and only 1,250 in 2010. It looks even worse when you compare transactions versus the population growth in the county. According to the US Census, our county population has over doubled from 22,297 in 1990 to 53,372 in 2010.
Should these two sets of data trend together? There does seem to be a correlation in the trends from 1990 to 2005 then they diverge significantly. I think one can make a case that in general people would rather own than rent. As the population grows, more people are buying and selling real estate so transactions should also grow.
Can we conclude anything from this comparison? I believe we still have a long way to go before we are back to a more normal real estate market in the county. I would hope that we would see a continuing recovering in transactions but at this point, transactions in 2011 are not up much from 2010. On the positive side, I believe there is significant pent-up demand for housing in the County. But until our unemployment rate drops further, financing becomes more available, and there is more clarity in the national economy, people will continue to be cautious when making a real estate purchase. I don’t see the end to our current buyer’s market for some time, possibly years.