FED RATE CUT: WHAT HOMEBUYERS NEED TO KNOW
Following the Federal Reserve’s move on September 18 to lower the Fed Funds Rate, potential homebuyers are likely to be asking two meaningful questions:
First, can they expect mortgage rates to fall in step with the Fed’s decision? Second, should they wait to see if home prices decline or rates go lower?
The answer to the first is “Possibly a little, but not much.” The answer to the second is, “No, sitting on the fence is likely a mistake.”
Let’s explain both answers.
By now you know that on September 18, the Fed slashed 1/2 percent (50 basis points) from the Fed Funds Rate – the rate banks charge each other for overnight lending. It means that rates on short-term borrowing, such as credit cards and car loans, are likely to follow suit. But rates on long-term lending, like mortgages, do not move in lockstep.
In fact, the 30-year fixed rate mortgage average started dropping in May, largely due to anticipation of a Fed rate cut. Between May 2 and September 19, the average rate declined from 7.22% to 6.09%, down from 7.79% in October 2023.
Key takeaway: Mortgage rates react to the news – in this case, early anticipation of the Fed cut – not the action itself. The benefit is already here. And we can’t be sure it will last.
History also shows that even while the Fed is actively cutting rates, mortgage rates can stay essentially unchanged or even increase. For example, between 2001 and 2005, the Fed cut short-term rates from roughly 6.5% down to 1%. During the same period, however, average mortgage rates only moved from around 7% to about 6%, constantly bouncing up and down.
Regarding home prices, it’s true that median sale prices on the Front Range have flattened out over the past year, even declining in some price categories. But as more people look to take advantage of lower mortgage rates, it means more competition for homes and the likelihood that prices could tick up once more.
Reduced mortgage rates, expanded inventory, and less competition have been three of homebuyers’ top wishes over recent years. This trifecta makes today’s market conditions attractive, so sitting on the fence could be an expensive mistake.
Call to discuss how you can benefit from today’s market.
FOR SELLERS, THERE'S JUST SOMETHING ABOUT THURSDAY
Travel gurus claim that Wednesday is the best day to fly (if you want the cheapest fare). Management experts say the best day to hold a meeting is Tuesday or Wednesday when people are most engaged at work. Similarly, strategists claim that the best days to post are Tuesday, Wednesday, and Thursday if you’re looking for maximum attention on social media.
You get the picture. The rhythm of life plays a part in how successful we can be at a given task on a given day.
The same goes for selling a house.
In a recent report by Bankrate.com, Realtors contend that Thursday is the best day to list a house for sale – ideally after 5 p.m. That’s due to the likelihood that homebuyers will visit properties over the weekend and start planning those visits at the end of the work week. When the buyers jump online Thursday night or Friday, the newest listings will likely be the first properties they see.
For the same reason, a Thursday or Friday listing is also believed to help sellers get the highest price, according to a 2021 Zillow study. In the same article, Redfin claims that Thursday listings generate faster sales, “selling five days faster than their baseline metric.”
WHY DAYS TO OFFER – NOT DAYS ON MARKET – IS THE BEST WAY TO TRACK HOUSING DEMAND IN NOCO
For anyone who wants to assess the level of activity in a local housing market, the most common statistical measure is known as Days on Market (DOM) – or how many days a home is listed for sale before a deal is closed.
However, in Northern Colorado, a better measure to gauge buyer demand is Days to Offer (DTO). Here’s why it matters:
Locally, our Multiple Listing Service determines a home is no longer on the market only after an offer is accepted and both parties have signed a contract. But that formula doesn’t reflect the true pace of the market.
What about listings for which there is already a contingency contract, but the seller still accepts backup offers? Or listings for which the seller has granted a first right of refusal to a would-be buyer – probably because the buyer is waiting to sell another property before moving forward on the contract – but continues to accept backup offers?
In these instances, there is an offer on the table. As you can see in the accompanying chart, there’s a big difference between DTO and DOM. In Loveland, for instance, the average DOM this year is 66 days, but offers are actually arriving in just 41 days – nearly 38 percent faster than the DOM data would suggest. In Fort Collins, Greeley, and Windsor, the difference is similar.
It’s important because the speed of the offer is a truer measure of what sellers can expect of buyer demand in Northern Colorado when they list their home for sale. And that makes a meaningful impact when you sit down with your Realtor to discuss your pricing strategy.
FORT COLLINS DOWNTOWN HOLIDAY LIGHTS BRIGHTEN WINTER NIGHTS
It’s the most wonderful time of the year.
Starting the first week in November and continuing through Valentine’s Day, downtown Fort Collins will be illuminated with about 65,000 LED lights: A total of 136,500 linear feet – or 25.8 miles – of holiday charm.
If you’re thinking, “My, that’s not such a holly, jolly energy bill,” then think again. According to the City of Fort Collins, using sustainable LED lights vs. incandescent bulbs reduces energy consumption by 90%!
The cheerful display will last five blocks along College Avenue, between Laporte Avenue and Magnolia Street. Trees will also be lit along Walnut Street, Linden Street, Pine Street, and Mountain Avenue, as well as Old Town Square and Oak Street Plaza.
Downtown lights in Fort Collins are nearly a 100-year-old custom. According to research from The Coloradoan, the “tradition of a local downtown holiday lights display dates back to at least 1928, when the Fort Collins Chamber of Commerce organized the placement of ‘colorful streamers’ of electric lights downtown just before Thanksgiving.”
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We are thrilled to announce that GroupGives recently presented $50,000 checks to two local organizations, Crossroads Safehouse and CARE Housing. CARE Housing is leading a new community campus project in south Fort Collins, which will include 72 affordable rental homes and address key issues like housing, homeownership, and early childhood education. Crossroads Safehouse’s “Road to Home” project provides rapid re-housing and support services for survivors of interpersonal violence. We are proud to partner with these organizations as they continue to serve and uplift our community.
REAL ESTATE BY NUMBERS
- 14. National rank for the Fort Collins metro area on the latest U.S. News Housing Market Index, which lists the hottest housing markets in the country. The report is based on June data. For statistical purposes, the Fort Collins metro includes all of Larimer County. The Denver metro area, which includes Aurora and Lakewood, ranked No. 5.
- $593,700. Median sale price for homes sold in the Loveland-Berthoud area during August, up 3.3 percent over the median price in August 2023. In all, 142 homes were sold that month in the Loveland-Berthoud area.
- 2. Where Colorado State University’s College of Veterinary Medicine and Biomedical Sciences ranks among the country’s best veterinary science programs, according to U.S. News & World Report. University of California-Davis is No. 1 and Cornell University in New York is No. 3.
- $120 million. Purchase price for the 405-unit Cycle Apartments, an eight-year-old development located at 3521 Stanford Road in Fort Collins. The development, which includes 18 buildings, is adjacent to the Foothills Mall. The property was sold by Loveland-based McWhinney Real Estate Services Inc.
- $14 million. Purchase price for the Harmony Commons retail center, located at 3541 and 3581 East Harmony Road in southeast Fort Collins. The center includes two buildings with 10 current tenants.
- $10.2 million. Purchase price for the former Hexcel manufacturing building, located in Windsor at the Great Western Industrial Park. Schmeeckle Bros. Construction Co., a Fort Morgan-based construction company, is the new owner. It has not announced plans for the 99,536-square-foot facility, located at 31815 Great Western Drive.
- 30,227. Total number of foreclosure filings affecting U.S. properties in August, down 11 percent from August 2023, according to a report by ATTOM in its latest U.S. Foreclosure Market Report.
- $15.75 million. Price that Josh Kroenke, a Walton family heir and president of the Denver Nuggets basketball and Colorado Avalanche hockey teams, paid for a home in the Cherry Hills section of southeast Denver. The 12,000-square-foot mansion includes five bedrooms and seven bathrooms. Josh Kroenke is the son of Stan Kroenke, who owns the Nuggets and Avalanche, as well as multiple other professional sports franchises.
- $25.2 million. Price paid for an 11,200-square-foot home in Avon, which was built in 1999 by the founder of the 1-800-Flowers enterprise. The ski-in, ski-out property at the base of the Beaver Creek resort includes five bedrooms and eight bathrooms.
- $2,003,223. Typical home value in Pitkin County, which includes the resort town of Aspen, according to the Zillow Home Value Index. The index ranks Pitkin as the second-most expensive county in the country, exceeded only by $2,545,939 in Nantucket County, which includes the Cape Cod seaside resort area in Massachusetts. Another Colorado county, San Miguel County, home to Telluride, ranks No. 8 with a typical value of $1,356,540.
- 8,561. Total enrollment for the University of Northern Colorado in the 2024 fall semester, up 1.7 percent over fall 2023. According to UNC officials, it marks the first increase in annual enrollment in seven years. Meanwhile, Aims Community College reported its total fall 2024 enrollment at 8,271, up 20 percent over 2023.