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Factors In Property Value

by The Colorado Springs Group™

Clearly there are a lot of factors in property value, but there is a big one that affects property value that no one likes to talk about... interest rates.

Supply and demand are obvious things that drive the market, but what if interest rates went up to 6% tomorrow? When interest rates go up, property values go down not long after. If you disagree, answer the following question.

If I'm qualified based on a monthly payment I can afford, and that payment at 4% APR allows me to buy at 250k house, how much can I afford to buy with a 6% APR?

No matter how you look at it, the answer is "less". If your home is listed for sale at 250k, and interest rates go up, there are going to be fewer buyers for your home. This means lower demand, and that never helps your value.

Interest rates in the 1980s were 18%. If you bought a home today at 250k (finance the whole 250k) with 18% APR, your mortgage payment would be north of $3700 a month. Someone who would qualify for a 600k or more home at today's rates would now only qualify for a 250k loan. The bottom line is that if interest rates go up, people cannot afford as much house, and as a result demand dwindles.

2011 October Sales Activity

by The Colorado Springs Group™

Broken down by area to give a better prospective on the results from October. Single Family & Patio Homes

Black Forest: 19 Sales for a total dollar volume of $7,305,250

Briargate: 46 Sales for a total dollar volume of $14,238,249

Central: 44 Sales for a total dollar volume of $7,058,100

East: 52 Sales for a total dollar volume of $8,599,834

Fountain Valley: 86 Sales for a total dollar volume of $13,845,265

Falcon - Peyton: 48 Sales for a total dollar volume of $10,659,059

Marksheffel: 10 Sales for a total dollar volume of $2,016,510

Northeast: 51 Sales for a total dollar volume of $10,247,705

Northwest: 22 Sales for a total dollar volume of $7,409,541

Northgate: 24 Sales for a total dollar volume of $8,409,237

Old Colorado City: 14 Sales for a total dollar volume of $1,557,800

Powers: 74 Sales for a total dollar volume of $13,919,510

Southeast: 49 Sales for a total dollar volume of $6,187,616

Southwest: 55 Sales for a total dollar volume of $18,564,639

Tri-Lakes: 39 Sales for a total dollar volume of $12,793,676

West: 14 Sales for a total dollar volume of $3,195,700

"Based on information from the Pikes Peak REALTOR Services Corp. ("RSC"), for the period 10/1/2011 through 10/31/2011.  RSC does not guarantee or is in any way responsible for its accuracy.  Data maintained by RSC may not reflect all real estate activity in the market."

 

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The Colorado Springs Group™
6665 Wild Indigo Drive
Colorado Springs CO 80923
(719) 799-3686

Kevin & Jessica
The Colorado Springs Group
6665 Wild Indigo Drive
Colorado Springs, CO 80923
(719) 799-3686