Mortgage Rates on FIRE! Home Prices Up in Smoke?

Mortgage interest rates have already risen by over a quarter of a percentage point in 2018. Many are projecting that rates could increase to 5% by the end of the year.

What impact will rising rates have on house values? 

Many quickly jump to the conclusion that an increase in mortgage rates will have a detrimental impact on real estate prices as fewer buyers will be able to qualify for a loan. This seems logical; if there is less demand for housing then prices will drop.

However, in a good economy, rising mortgage rates increase demand as many prospective purchasers immediately jump off the fence to guarantee they get the lower rate.

Let’s look at home prices the last four times mortgage rates increased dramatically.20180222-STM-ENGIn each case, home prices APPRECIATED and did not depreciate. No one is projecting as dramatic an increase in rates as the examples above. Most are projecting an increase of approximately 1% by the end of the year.

The last time mortgage rates increased by 1% over a twelve-month period was January 2013 (3.41%) to January 2014 (4.43%). What happened to house prices during that span? They appreciated by 9.8%.

Just two weeks ago, Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting explained:

“Mortgage rates have risen 1% or more ten times in the last 43 years, with little impact on home sales and prices when the economy was also strong…Historically, rising confidence, solid job growth, and higher wages have more than offset reduced demand for housing resulting from higher mortgage rates.”

Bottom Line

When mortgage rates increase, history has shown that prices appreciate (and do not depreciate) during that same time span.


Selling Your Home: 7 Must-Know​ Pricing Myths

Pricing your own home is hard, what with all the history and hopes this magic number entails. Of course, you want to make a profit. Of course, all that money you spent installing a swimming pool or a half-bath will be recouped, because you’re leaving your digs in better shape than when you bought it, right? Right?

Well, not necessarily. Too many home sellers fall prey to myths about home pricing that seems to make sense at first, but don’t jibe with the reality of real estate markets today. To make sure you haven’t bought into any of this malarkey—since the buyers, you’re trying to woo sure haven’t—here are some common pricing myths you’ll want to rinse from your brain so you kick off your home-selling venture with realistic expectations. It’s time to get real, folks!

1. You always make money when you sell a home

Sure, real estate tends to appreciate over time: The National Association of Realtors® estimates that home prices will jump 5% by the end of 2017 and continue rising 3.5% in 2018. But selling your home for more than you paid is by no means a given, and your return on investment can vary greatly based on where you live.

The NAR also found, for instance, that the cost of a single-family home increased in about 87% of the metros it studied, but prices actually dropped in 23 markets. So don’t assume you’ll walk away with a profit until you’ve examined what’s up in your area first.

2. Price your house high to make big bucks

We know what you’re thinking: “Hey, it’s worth a shot!” But if you start with some sky-high asking price, you’ll soon come back to Earth when you realize that an overpriced home just won’t sell.

“While the payday might sound appealing, you’re actually sacrificing your best marketing time in exchange for the remote possibility that someone will overpay for your home,” says Kathleen Marks, a Realtor® with United Real Estate in Asheville, NC.

While certain buyers might be suckered in, this becomes far less likely if they’re working with a buyer’s agent who will know all too well when a home is overpriced, and advise their clients to steer clear. And this can lead to problems down the road (as our next myth indicates).

3. If your home’s overpriced, it’s no big deal to lower it later

Sorry, but overpricing your home isn’t easily fixed just by lowering it later on. The reason: Homes that have lingered on the market for months—or that have undergone one or more price reductions—make buyers presume that something must be wrong with it. As such, they might still steer clear, or offer even less than the price you’re now asking.

Bottom line: “Price your home appropriately from the beginning for your best shot at having a quick and easy sale,” Marks recommends.

4. Pricing your home low means you won’t make as much money

Similarly, sellers are often leery of pricing their home on the low end. But as counterintuitive as this seems, this strategy can often pay off big-time. Here’s why: Low-priced homes drum up tons of interest, which could result in a bidding war that could drive your home’s price past your wildest dreams.

5. You can add the cost of any renovations you’ve made

Let’s say you overhauled your kitchen or added a deck. It stands to reason that whatever money you paid for these improvements will be recouped in full once you sell—after all, your home’s new owners are inheriting all your hard work.

The reality: While your renovations might see some return on investment, you’ll rarely recoup the whole amount. On average, you can expect to get back 64% of every dollar you spend on home improvements. Plus that profit can vary greatly based on which renovation you do.

Check out this list of common renovations and their return on investment to know what you can actually expect.

6. A past appraisal will help you pinpoint the right price

If you have an appraisal in hand, from when you bought or refinanced your house, you might think that’s a logical place to start to price your home. It’s not!

An appraisal assigns your home a value based on market conditions at a specific date, so it becomes old news very quickly. In fact, lenders typically won’t accept appraisals that are more than 60 days old.

“Since lenders know markets can change in six months’ time, it’s important for sellers to understand that a previous appraisal is never a reliable source for the current value of a home,” Marks says.

7. Your agent might overprice the house to make a bigger commission

Don’t even go there, says Realtor Raena Janes of RJHomes in Tucson, AZ.

“While it’s true that an agents’s commission is based on the selling price of a house, the disparity will end up being negligible,” she says. For example, the difference in commission between a $300,000 house and one that’s $310,000 is about $150.

“No real estate agent is going to lose a sale for the sake of a couple hundred dollars,” she explains.




by Cathie Ericson, a journalist who writes about real estate, finance, and health. She lives in Portland, OR. Follow her @CathieEricson

Relief for Buyers Stuck in a Seller’s Market

Good news for buyers: Denver’s perpetually tight real estate market loosened up in June, according to a market trends report by the Denver Metro Association of Realtors.

Residential inventory in the Denver metro area increased nearly 20 percent in June compared with May. Though the added inventory could be a sign that the market is shifting to be more buyer-friendly, experts do not believe prices will drop quite yet.

“The rate of (price) growth is slowing,” said Steve Danyliw, chairman of the Denver Metro Association of Realtor’s market trends committee. “It’s not unexpected. The reality is that having double-digit growth is unsustainable.”

The inventory increase from May to June is significant, Danyliw said. Though the market typically experiences a boost during this time of year, the inventory increase normally is closer to 6 percent (though last year it was 24.4 percent). The jump can be attributed to increasing prices as fewer people are able to afford a home in the metro area, he said.

While overall inventory is increasing — it rose 3.87 percent from June 2016 — affordable housing is not. The largest gains contributing to the inventory jump are condominiums — compared with last year, there was a 22 percent increase in condo inventory, compared with a slight decrease of 0.72 percent in single-family home inventory.

Meanwhile, housing under $400,000 is selling fast, and the proportion of affordable homes has significantly decreased in recent years. According to the report, these homes made up 65 percent of the market in 2011, compared with 26 percent today.

“(The question is): What can the average home buyer truly afford, and can they afford these home prices?” Danyliw said. “I think (prices) will continue to creep upward. The affordability question is hard to answer.”

In June, the average single-family home in the metro area went for nearly half a million dollars — $498,792, and it was a 7 percent increase from a year ago.

“We still have amazing demand, but I don’t think we have the wages in the metro area to support these prices continuing to approach a half a million-dollar price point,” Danyliw said.

Overall, prices do seem to be slowing. Denver fell from the top of the Case-Shriller index in May, an indication of the fastest growing home prices in 20 major cities, and this month it did not come back. Previously, Denver held a position in the top three for over a year.

Danyliw said this is the first time since 2013 that he’s seen a market indication that growth will slow.

“It’s really going to hopefully create a balance that will favor buyers,” Danyliw said of the inventory indicator. “In the past three years we had fundamentally low inventory, and that’s been driving the extreme seller’s market.”

However, Danyliw said he and other experts in the field are not worried about a housing bubble. He said other economic indicators — such as distressed home sales and job growth — indicate the market is strong and that homeowners are financially stable. And, leading up to the housing market crash in 2008, it was a buyer’s market, not a seller’s.

“For something to really depress the housing market it would have to be something that we cannot predict, something that would be a shock to the whole economic system,” Danyliw said of his forecasts. “The underlying fundamentals are very strong.”

Buying & Selling in Winter: Nuisance or Opportunity?

I’ve been in real estate for a while now and one of the most frequent questions I’ve received is whether or not now is a good time to buy or sell a home.winter-in-poland-tips

This is a legitimate question because winter is not, traditionally, a popular time to shop for a home in Colorado.  It seems a better time to curl up near a roaring fire and sip a steaming cup of hot chocolate. Why would anyone rather trudge through the freezing temperatures, the wind, and the snow to look at house after house?

The truth is that many buyers and sellers are doing just that because they understand the real benefits of buying and selling their homes now versus waiting until summertime.

you-decide-sign-choiceDo you understand the benefits of moving now?  Below, I’ve outlined some of the most influential benefits of buying and selling in winter.  Of course, everyone’s situation is different so read on and decide what’s best for you and your family.

Benefit #1: You’re the Center of Attention

Wintertime homebuyers can count on having a seller’s full attention because it’s unlikely that a seller has multiple offers on the table.  This is in complete contrast to summertime shopping, which requires rushed decision-making and submitting offers on multiple homes before finally ‘catching’ the right home.

For sellers, decreased inventory in the winter means that your home will be less diluted by competition.  Sellers will also receive more serious offers–no one window shops for homes in the dead of winter, it’s just no fun.  And of course, sellers are less likely to be bothered by the whole selling process like unnecessary foot traffic, inquiries, and open houses.

keep-calm-you-re-the-center-of-attentionMutually beneficial is the fact that lenders, appraisers, inspectors, and even realtors are just not as busy during the winter as compared to the summer months.  What this means for buyers and sellers is that they can expect much faster processing times and more detailed work by all parties.  Most importantly, people just seem more relaxed during the winter, and where there is less hustle-bustle there is more consideration and kindness for everyone.

Benefit #2: Price Negotiations are a Win-Win

Homebuyers simply want the best deal for the house they desire and winter allows this goal to be very attainable.  When a homebuyer finally finds that special home, a wintertime seller will allow for more negation because they have a real reason for selling… Perhaps they are trying to sell before tax season or maybe they’re moving for a new job, family, or a difficult financial situation.  Whatever the case, winter sellers are most certainly motivated sellers, which equates to an average of 1-2% in price change or concessions during negotiation.

Now, this does not mean that sellers lose if they decide to sell their home in the winter.  If a homeowner is selling in the winter, it’s likely that their motivation is of greater concern than the 1-2% they might need to forfeit in the sales price or concessions.  For instance, maybe a seller’s tax savings outweigh the price of negotiations or maybe paying two mortgages while waiting for the summertime market will cost more than simply working with a motivated buyer.

In the end, if a homeowner does decide it’s more beneficial to sell in the winter they can count on a win-win situation during negotiations, which leaves both the buyer and the seller happy and confident about their ultimate agreement.

Benefit #3: Beat the Fed’s Interest Hikes

As of today, interest rates have increased three-quarters of a point and are projected to increase a total of 4 points over the next year.  What this means for buying power is a decrease of approximately $10,000 per quarter point of additional interest. In total, this will change the buying power of a family this year from $400,000 to $270,000 by next year.

Now, I know these numbers sound drastic and almost unrealistic but take a look at the historic interest graphic below and do your research.  Rest assured that the market is not going sour; it is finding its natural balance after the recent housing slump.


The Right Answer for YOU

Buyers, maybe it matters more to you to have a stress-free shopping experience so you buy in the winter or maybe being in the hustle-bustle of multiple offers and quick decision-making excites you so you choose to buy in the summer.

Sellers, maybe you are in no hurry to sell your home or you get excited about the idea of people fighting over your home and would like to see your sales price increases by 1-2%, so you sell in the summertime. Or maybe you have an urgent reason to sell now or simply don’t want to hassle with the anxiety and stress that’s generally associated with summertime sales, so you sell this winter.

The truth is that there is no best or worst time to buy or sell a home; it always boils down to what is best for you and your unique situation.  Nonetheless, this year is slightly different than most because one thing is for absolute sure…waiting for the summertime to buy or sell a home will benefit the banks.

Now, call your local real estate professional and start asking questions today.  Winter is a great time to find opportunity in the Real Estate market!!



The more engagement we receive the more beneficial this post will be for all readers; so please share your comments, experience, questions or thoughts below.

Your Home Protects You, Don’t Forget to Protect your Home!

Continue reading to find out how completing this Winter checklist will benefit you now and well into the future.


  1. Everybody’s favorite, the gutters, and downspouts clean out! Those clogged gutters can lead to damage to fascia, soffits and even cause roof damage.  Repair or replacement can run from $50 per section and up into the thousands of dollars!
  2. Change HVAC air return filters and furnace filters because a properly functioning system can save you BIG BUCKS on cooling and heating bills each and every month!
  3. Shut down, drain and cover swamp coolers or AC units.  Frozen water may cause incredible damage that may not be repairable, requiring replacement.  Cleaning, draining and covering against weather and varmint damage saves you $100 – $2500 or more in repair or replacement costs!
  4. Check the weather stripping around exterior doors and around the windows. Reducing the loss of cool or warm air can decrease your energy costs and save you anywhere from $25 to as much as $150 or more EVERY MONTH!
  5. Remove screens and replace with storm windows – see above for the energy savings you can realize on a monthly basis!
  6. Shut off and insulate outdoor spigots for the season.  While a frozen spigot might thaw out, there’s also the chance of burst pipes.  Not letting that happen saves you $150 – $300 or more, depending on resulting damages!
  7. This is a great time to test the smoke and/or carbon monoxide alarms.  Install fresh batteries at a cost of about $3-$15 depending on how many units you have.  This could save a life in the coming season and that is PRICELESS!


  1. Clean outdoor furniture in preparation of storing for the winter.  Savings add up fast, as new lawn furniture has increased dramatically.  NOT buying new every year can save you big next summer, and that money, possibly as much as $1000 could go toward your vacation instead!
  2. Drain fuel from lawn equipment before storing for the winter.  Engine components can gum up or water mix with the gasoline causing damage.  Savings are anywhere from $50 – $1500 when you don’t have to purchase new equipment each year!
  3. Examine sidewalks, walkways, stairways, patios, and driveways for cracks, crevices or missing chunks.  Keeping these in shape is a safety issue as well as a savings when kept in good repair!
  4. Perform a visual roof inspection to catch any small spots needing repair to avoid water damage to rafters or leaks that ruin ceilings. Savings can be quite significant in the long term! A roof should only need replacing once every 20-30 years depending on the material used.
  5. Seal any foundation cracks.  Even small ones can allow further water damage to occur.  Be sure any water runoff is directed away from the house and not allowed to pool along the foundation line.
  6. And don’t forget the landscaping! This is the time to prune those trees and bushes and aerate the yard for healthy new growth next spring.  Savings include equity gains come sale time since TREES increase the market value of a home!


  1. Chimney inspection!  Before opening up for the season, have the chimney cleaned and serviced to make sure damper is operating properly.  The cost to skip this maintenance chore?  If the house burns to the ground it could run to the tens of thousands!
  2. Clean the dryer vent as a fire prevention measure – see above for the value in this maintenance move!
  3. Peeling paint isn’t just unsightly, in some subdivisions with HOA rules it could cost you a fine of $100 or more!  One small section left unattended allows the weather to cause further peeling and further peeling until the $35 maintenance becomes a several thousand jobs to correct!
  4. If you’ve got a humidifier, regular maintenance keeps you and your family’s lungs clear of bacteria that can build up – PRICELESS SAVINGS MOVE!
  5. Have a sprinkler system? Be sure to drain or have it blown out to avoid cracked pipes and water leaks next watering season.  Savings are high in this area as a new system could run as much as $400 per zone to install a new system.
  6. Is the doorbell working properly?  Almost no one ever checks their own doorbell but you don’t want to miss out on being alerted that YOU ARE THE PUBLISHERS CLEARING HOUSE WINNER OF $5000 A MONTH FOR LIFE! (Okay, we’re joking around a little here haha), but seriously, a working doorbell may not seem a big deal now, but how important might it be to a potential buyer when the time to sell the home arrives?

LAST NOTE: It takes about one-two weekends to complete all the items on this Winter Maintenance Checklist and while it isn’t extremely excited to spend a couple of weekends-during football season-working around the house, just think about all the savings and peace of mind you’ll enjoy.

Share your personal experience and advice in the comments section below.