Michael Shotnik, Direct Mortgage Banker

Denver1stmortgage.com

Fed rate cut

The Fed cut its key lending rate by .5% before the market opened this morning.  The market reacted positively for about an hour and then sold off as a result of higher expectations for the Fed cut.  Wall Street is remaining hesitant until there is more certainty in the market.  I've heard a couple analysts say we'll soon see a 1000 point jump in the market on any given day.  This makes sense; a lot of investors have pulled large sums of money out of the market and are waiting for a "safe" re-entry point.  In my opinion we are getting to the low point and the market will have no reason to go any lower and that's when we'll see massive volume and  massive gains.      

Housing Market

Despite looming credit issues Augusts' pending homes sales index reflects an increase in buyer activity.  This index tracks how many homes are under contract at any given time and in August the numbers of home under contract was up nationally and even more so in the west.

Nationally                                           West

Vs July:  +7.4%                                   Vs July:  +18.4%                                

Vs last year: +8.8%                             Vs last year: +37.8%

As you can see above the West is performing much better than the national average.  Since August mortgage applications have remained consistent we should continue to see our housing economy do better than expected.  The driving factor behind real estate purchases is employment.  Colorado has out-performed the majority of the country which is probably the strongest sign of recovery.

Average Sales Price:

As can be seen above the change in trends in Colorado took place over the course of 2007.  By tracking the second quarter on we should be able to see if we are pulling out of our downward trend which it looks like we may.  We know applications are up and rates are down which should bring buyers into the market and reduce inventory, which should also at least level home prices out.  In any other market I think we would start to see an upward trend but with the tight lending guidelines and the national slump I think the trend may come a little slower.  But when we do level out and start heading back up the trend will probably last longer and be much stronger than the last uptrend.

Michael Shotnik, Direct Mortgage Banker

Denver1stmortgage.com