By Dr Denver H. Bubble
The average price of a single-family home sold in the metro Denver area passed $500,000, up 11.8% from the previous year. Incomes gains in the Denver metro was about 3%. This is surely sustainability. Another factor was rates on a 30-year mortgage was up 4.43% as of March 1 from 3.9% at January 1 according to Freddie Mac. To put that increase into dollars, a 0.5% move in mortgage rates adds $117 mortgage payment a month on a $500,000 home with 20 percent down.
Experts think that the rapid rise in rates probably didn't affect the buyers in the first two months of the year as buyers can lock in lower rates lower rate form lender up to 90 days out. The real test of the metro Denver house market will be in the hot March to June season with mortgage rates pushing 4.5%.
Supply constraints are easing slightly going into the busy season of March to June. The number of homes available to buy at the end of February rose almost 7% to 3,105. Sellers listed 4,638 homes in February, an increase of 10.9% from January. Historically, February sees a 6.8% jump in new listings from the prior month. Supply of listings coming onto the market at a faster rate than in years past and the increase in mortgage may be the forces that finals begin to deflate this real estate bubble, as we enter March it will be interesting to see which way the market turns as we are reaching an inflection point