23rd Sep, 2009

First Time Denver Homebuyers: Leap!

Denver CO real estate may be selling like hotcakes this fall.  With cooperative interest rates and only 68 days before the closing deadline for the $8,000 tax credit, first-time buyers are scurrying to find suitable Denver CO homes and mortgages.

Mid September 2009, interest rates improved, going back to the low 5-percent range.  For buyers using 1.00 point and a 20-percent down payment on $250,000 Denver home purchases, the 30-Year Fixed Rate is 5.125 percent.  The 30-Year Fixed Rate for $600,000 purchases of Denver real estate with a Jumbo Loan is 6.125 percent.

Additionally, the scales are tipping toward ownership as a bargain.  An AP Study conducted by Marcus & Millichap Real Estate Investment revealed that the gap between median mortgage prices and median rent has dropped substantially.  M&M studied 45 metro areas.  In 2006, the gap was $777 so it paid to keep on renting.  In 2009, however, the average gap is only $221.  In Cleveland, Atlanta, Indianapolis, and St. Louis, the average gap proved to be less than $100.

We highly recommend that buyers work with experienced real estate agents and reputable mortgage brokers to find the right real estate for their budgets.  Since the gap varies by market and neighborhood, professionals are best able to help first-time buyers find the right homes.  Experienced lenders must be able to deal successfully with limited time to meet the deadline for the $8,000 tax credit.  Closing must happen before November 30, 2009.

News of lower interest rates is good news considering that there has been simultaneous pressure because of $70 Billion in Treasury debt auctions, especially 3- and 10-Year Notes and 30-Year Bonds.  On another note, consumer spending and consumer credit are down.  Consumer spending is 70 percent of the Gross Domestic Product.  There is cause to be cautious about consumer spending.  Today, the Dow Jones is at 9,841 as it continues to shy away from the 10,000 mark.  Unfortunately, the Dollar has weakened relative to the Yen and Euro.

So why buy real estate this fall?

1.    Interest rates are low but will go up as nation seeks to pay off its debt

2.    A $8,000 Tax Credit is on the table

3.    Home prices are still down but are edging up

4.    Homes offer shelter and a long-term investment

For more information about real estate in the greater metro area, including farms and horse properties, call Michael Paul of Realty Oasis at (303) 268-6052.

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