There’s a shortage of home inventory at the moment, which is driving up the price of real estate. Obviously, this is great news for sellers, but it’s not all bad for buyers, either. Why? Historically low home mortgage interest rates!
Last month, interest rates hit all-time lows, falling below 3% for the first time in six decades. As we head into the latter part of summer, home mortgage rates repeatedly hit record lows, week after week.
Recently, the U.S. Census Bureau noted:
“The homeownership rate of 67.9 percent was 3.8 percentage points higher than the rate in the second quarter 2019 (64.1 percent) and 2.6 percentage points higher than the rate in the first quarter 2020 (65.3 percent).”
This is in large part due to buyer’s being empowered—despite continued economic uncertainty—by low mortgage rates. According to the National Mortgage News, buyers were able to afford $32,000 “more house” as of July 23 than they could this time last year. A better home means a better investment, and the difference in affordability based on the same monthly payment is significant.
A Quick Look at the Numbers
- If you purchased a $300,000 home in the 2000s, your average interest rate of 6.29% would have made your monthly payment $1,855.
- A $300,000 home in the 2010s would have been less than $1,500 a month as the interest rates hit a more reasonable 4%.
- Today, with rates below 3%, your $300,000 home purchase gets you into a monthly mortgage payment just a tick over $1,200.
We won’t even tell you what your monthly payment would have been in the 1980s where interest rates rocketed well above 12%, but the gist of all this is clear. Today’s reduced interest rates will lead to immense savings over the life of a home loan, allowing buyers to wield immense purchasing power in 2020.
Colorado Continues to See Record Home Sales
The low rates are a huge advantage for buyers, even more so in a state like Colorado where real estate continues to boom.
The Colorado Association of Realtors reported 10,771 single-family home sales in July—shattering the previously monthly record and resulting in a 21% increase from last year.
WIth an abundance of outdoor activities, a breathtaking landscape, and year-round desirable climate (generally speaking), the popularity of the Centennial State comes as no surprise to many. Add to it the ever-increasing migration from states like California and New York, which has only been exacerbated by the coronavirus, and Colorado continues to see an influx in population growth. In fact, personal finance company SmartAsset lists Colorado as a top 10 destination for Gen-Xers and Millennials.
Now let’s circle back to today’s record low interest rates…
The numbers we broke down don’t lie: all those Gen-Xers and Millennials flocking to Colorado can expect to secure a lower rate than the past two generations of homebuyers in their families. With that comes tremendous upside for those hoping to stretch their budget and get more home for their money, especially in popular Colorado Springs’ growth areas like Northgate.
“We have quite a few Millennials looking in the Northgate area due to the growth, amenities, near the freeway and close to Castle Rock and Denver where many of them work,” says Tanya Stevenson, Co-Owner and Managing Broker at Park Avenue Properties of Colorado Springs. “There is a lot of new construction as far as spacious townhomes, patio homes, and single-family homes that are of interest to many of them right now.”
For Buyers and Sellers, There’s No Time Like the Present
Sparse inventory, lightning-quick sales, and bargain basement interest rates have coalesced into the perfect scenario for both buyers and sellers. Who would have thought as the sky was falling in March that in just a few short months, the real estate market would manifest something not seen in 50 years―quite possibly a once-in-a-lifetime opportunity.
If you’re considering buying or selling a home in Colorado Springs, don’t wait! Start today by getting in touch with a local realtor to discuss a customized plan and determine your best next steps. Contact Park Avenue Properties of Colorado Springs at (719) 548-9900 or send us an email to explore your options and strike while the iron’s hot.