Today’s New York Times article about the Federal Reserve announcing a hold on interest rates, keeping them near zero for the foreseeable future, is a typical parable about how the Denver flyover zone continues to march in almost the exact opposite direction – at least as it applies to real estate – to the rest of the country. We went through the foreclosure car wash before anyone else; we avoided the massive run-ups in value, and few people want to leave here.
I talked to a couple of lenders that work the Denver metro area about this news, and they all seem to have the same opinion: Denver has done well to weather the real estate plunge. One loan officer at a national bank branch in Centennial said that rates are probably going to hold steady until the election, regardless of the Fed’s announcement. “After that, TBD,” he says, “but we’re doing better than the rest of the country.”
His view is that with Europe still in turmoil and an overbought stock market, more money continues to flow into treasuries.”The next market move is likely going to be down,” says the loan officer.
Still, read this little blast from Ian Sheperdson, chief United States economist at High Frequency Economics, in the same article: “Here’s what all Fed promises are worth: nothing, if the data tell them to do something different.”
Which is a fair point, considering that neither Japan’s nuclear crisis or Greece’s pull on the euro was completely foreseen. As a result, says one local independent mortgage broker, “Don’t be lulled into thinking you can wait another two years to buy. Mortgage rates and the prime rate are not exactly connected!”
(I’m a Realtor, and am not interested in muddying the waters with cross-promotion between myself and lenders; hence the anonymity.)
My take is that the buying cycle in Denver has already started and fresh inventory is getting bombarded with showings. And, the best homes are getting scooped up quickly. Once current sellers understand that their price points are still too high (see my East Wash Park and Cherry Creek North analyses), they’ll either miss the boat or align themselves with the current demand. That demand, by the way, is willing to pay more than last year, based on the three weeks that have passed.
Isn’t it nice to live in a flyover state? Especially one that’s 5,280 feet above the economic cesspool below?