Although there continue to be mixed economic signals, more positive factors are beginning to creep in.  Mortgage rates tumbled to historic lows, with the national average rate on a 30-year fixed-rate mortgage falling to 4.94 percent, the first time the average has fallen below 5 percent since record-keeping began in 1979.  The low rates, however, are available only to exceptionally qualified borrowers.

 

The recently signed Homeowner Affordability and Stability Plan should stabilize the housing market through the home affordable refinance program and the home affordable modification program which is estimated to help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly payments.  Colorado already reported that the state’s foreclosure filings dropped 2% in 2008, compared to 2007 when fillings grew by 40.3%.  Compared with other states, Colorado was early in getting borrowers and lenders to talk to each other to resolve a loan default.

 

Denver was the national leader for housing prices last year.  Home prices in the Denver area dropped 4 percent during 2008, but that was the smallest decline of the 20 metropolitan areas followed in a recently released study.  Some local experts were predicting that the Denver-area housing market should hit the bottom no later than the end of the third quarter of this year, and maybe as early as the end of the second quarter.  Denver was among the cities with the least run-up during the boom, with prices rising by 40% from 2000 until the peak in August of 2006.  Home prices have since given back less than 10 percent of the gains, contrasted with cities like Miami and Los Angeles, where prices rose almost 200 percent but have since declined by almost 40 percent.

 

The number of homes placed under contract in the Denver area housing market in February increased 9.2 percent, although it’s still down 18.4 percent from the same period last year.  The median price for a single-family home was up 5.8 percent from January and condos rose 4%, with both down substantially from 2008.  It does appear that home prices in our area have moved closer to stabilization.  The month-to-month improvement points toward rising consumer confidence.

 

Even nationally, analysts say home prices are closer to stabilizing today than at any time in the past nine years.  Based on the latest data, prices for new and existing homes combined now equal 2.9 times median household income, nationwide.  Three years ago, just before the housing bubble burst, this ratio was 4.5 times income.  Add in the fact that interest rates are much lower today than they were two decades ago and housing is even more affordable.

 

Another important trend locally is that that available home inventory dropped 20.54 percent, with March inventory of homes in Denver the lowest in 6 years.  This trend will likely cause an increase in the demand for those fewer properties on the market, with a subsequent increase in buyer activity.  Denver has outperformed most of the nation in the housing market, in large part due to Colorado’s above average population growth and job stability.  Maybe things aren’t as bad as we thought!