As published in DMAR Market Trends, March 2024

Sellers are increasingly trusting the Federal Reserve’s assurances of three potential interest rate drops this year. Consequently, they are slowly removing their “golden handcuffs” and stepping off the fence to look for new homes.

According to the Colorado Department of Labor and Employment, Colorado experienced greater job growth in 2023 than initially reported adding 57,900 jobs throughout the year–up from the previously reported 24,100. The change pushed Colorado to the 11^th highest growth rate nationally, up from the slowest rate before the benchmark revisions. About 80 to 85% of additional jobs are located in Metro Denver.

Colorado HB24-1007, known as the “Home (Harmonizing Occupancy Measures Equitably) Act,” proposes banning occupancy limits currently enforced in two dozen Colorado cities. If passed, the bill would remove the limit on the number of unrelated people allowed to live together, opening up more shared living options.

Despite elevated property tax bills, Colorado ranks within the top three states with the lowest property taxes by percentage of the property’s assessed value.

President Biden is calling on Congress to enact legislation to enable more Americans to purchase a home, proposing a $5,000 tax credit for mortgage relief and up to $25,000 in down payment assistance for first-generation homebuyers.

Redfin’s analysis of estimated U.S. incomes reveals that prospective homebuyers now require an annual income of $75,849 to afford the average U.S. starter home, marking an 8.2% increase compared to a year ago.

A recent Zillow analysis of 2023 sales found that homes listed in the first two weeks of June sold for 2.3% more than any other time of the year, translating to a $7,700 increase in value for the typical U.S. home. In Denver, peak price premiums were observed in the second half of May, with sales commanding a 2.9% premium over the rest of the year.

Job growth continues to bolster our economy, keeping rates elevated. February data from the Bureau of Labor Statistics (BLS) report, marked the 38^th consecutive month of job growth–a streak that stands as the fifth-longest period of employment expansion on record. Moreover, it marked the 25^th consecutive month with unemployment below 4%, the longest stretch in over 50 years.

PCE data released on March 29 came in as expected, following the Consumer Price Index’s (CPI) two consecutive months of higher-than-expected inflation earlier in March. Personal spending jumped 0.8%, and wholesale inflation (PPI) recorded its sharpest increase in six months. All evidence suggests that inflation remains elevated, and a Fed rate drop is not imminent.

A recent Bankrate survey revealed that half of potential homebuyers say they can’t afford a down payment.

New data suggests that the number of HOAs is expected to increase by 3,000 in 2024, potentially escalating homeownership costs for residents.

MORTGAGE NEWS

As March wound down, mortgage rates fell into a 6.9% lull, sparking a 15% surge in mortgage purchase applications. Even when rates stabilized at 6.6% in January, there was a notable 24% increase in applications This indicates that demand can rise without rates dipping into the 5% range.