Buyers and Renters Come Home To Colorado

Frederick, Colorado

Recent job growth in Colorado is impacting the local real estate market in a positve way. This is good news for the Colorado economy and most notably-the local real estate market. As Colorado's businesses and state economy see gains, the trend for property prices stabilizing will turn towards increased home sales and rentals. The equation is quite simple - More Jobs = More Demand for real estate.

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Dropping Home Prices Good for Market Overall?

Posted at Buyers and Renters Come Home To Colorado by Mike Gold

Jul. 18, 2008

Mike J. Gold
Managing Broker
RE/MAX Horizons Group
Office: 303.327.6880
Fax: 303.327.6890
Toll Free: 1.800.626.1419

Visit mikejgold.com

Visit My Community Website ErieNeighbors.com

When the dust kicked up by the current mortgage crisis settles, we may well look back on these days as a great time for investment. With home prices off 35-50% in some areas from highs set a few years ago, purchasing properties has scarcely been easier. On the other hand, dropping home values and worries about the solvency of the mortgage investment capital firms Fannie Mae and Freddie Mac could be the other edge of the sword. Firms like Fannie and Freddie are necessary to ensure liquidity and stability in the mortgage market as they provide the actual funds that mortgage securities investors’ receive as returns on their investments. They represent the only such companies in existence and currently own or back $5 Trillion in mortgages. The main fear of investors is that any disruption of Fannie and Freddie's operations could directly affect mortgage rates, possible raising them as much as 0.25-0.50%. Currently, while the market waits to see what will become of Fannie and Freddie, mortgage rates continue to drop. The prime rate for a 30-year fixed rate mortgage fell 0.05 points to 6.48% in the last week according to Bankrate.com. The prime 15-year fixed fell 8 basis points to 6.01% while the rate for an 5/1 ARM is down .04 points to 6.05%.

Economic Indicator	Release Date and Time	Consensus Estimate	Analysis
Producer Price Index (June)	Tues. July 15, 8:30 am, et	All Goods: 1.8% (Increase) Core: 0.3% (Increase)	Very Important. Surging oil and food prices could push the economy closer toward recession.
Retail Sales (June)	Tues. July 15, 8:30 am, et	0.4% (Increase)	Important. The increase is likely the result of higher prices, not additional purchases.
Business Sales (May)	Tues. July 15, 10:00 am, et	0.0%	Important. No increase in sales suggests businesses activity is slowing.
Mortgage Applications	Wed. July 16, 7:00 am, et	None	Important. Lower rates and lower home prices are stimulating additional activity.
Consumer Price Index (June)	Wed. July 16, 8:30 am, et	All Goods: 0.7% (increase) Core: 0.3% (Increase)	Very Important. An unexpected increase in consumer prices could push credit rates higher.
Industrial Production (June)	Wed. July 16, 9:15 am, et	0.1% (Decrease)	Moderately Important. Production is expected to fall on slowing business sales.
Housing Market Index (July)	Wed. July 16, 1:00 pm, et	18 Index	Important. The index confirms that the housing recovery remains elusive.
Federal Reserve FOMC Minutes	Wed. July 16, 2:00 pm, et	None	Important. The minutes are expected to reveal clues to the Fed's bias on interest rates.
Housing Starts (June)	Thurs. July 16, 8:30 am, et	960,000 (Annualized)	Important. Markets are looking for signs of stabilization.

Why we shouldn't worry

Since the rates Fannie and Freddie borrow at are directly tied to the prime, they are still able to borrow at a fairly low rate, so even as their corporate stock prices decline, the securities they sell remain strong. This means the financial institutions Fannie and Freddie borrow from will continue to lend then the billions of dollars a week they need to keep the market liquid.

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