Nov

10

8.5% or 6.6% in Two Years

Filed Under mortgage 

Here’s an article from the Rocky Mountain News discussing Rates, Home Sales and Housing Bubbles.

Rising rates won’t stunt home sales, builder says

By John Rebchook, Rocky Mountain News
November 10, 2005

Mortgage rates will rise to 8.5 percent in two years but won’t trigger a massive slowdown in Denver-area home sales or a housing bubble, Pat Hamill, CEO and president of Oakwood Homes, said Wednesday.

Hamill said rates were that high in 1995 and 1998, which were good years for home sales in the Denver area. But Hamill also pointed out that rates actually were falling during those years. Thirty-year, fixed- rate mortgages now are hovering around 6.5 percent.

Economic growth and job creation are far more important than higher rates, Hamill said.

Hamill was among the speakers at the 2005 Rocky Mountain Commercial Real Estate Expo Fall Forecast, held by the University of Denver’s Franklin L. Burns School of Real Estate and Construction Management.

Other speakers gave mostly rosy outlooks for the office, industrial, apartment, retail and land markets.

“We’re finally clawing our way out of the trough,” said Natasha Felten, president of Colorado Commercial Cos.

Hamill said one reason there won’t be a housing bubble is that homes aren’t as liquid as stocks. Even if home values fall, most people won’t be forced to sell, which is what often happens when stock prices drop, he said.

Also, speculators – who are artificially driving up home prices in other markets, such as California and Las Vegas – no longer are a factor in Denver, he said.

And home buyers in the U.S., on average, pay a smaller portion of their salaries to buy homes than do homeowners in other parts of the world, making them less vulnerable to falling values, Hamill said.

In the U.S., a typical buyer spends the equivalent of 3 1/2 times their annual income to buy a home, while in England, an average buyer spends seven times their income, he said.

People stretching to buy homes in hot markets such as California and Las Vegas, though, may be getting close to what U.K. homeowners pay, he said.

“We’re going to see that in our lifetime,” Hamill said.

rebchookj@RockyMountainNews.com or 303-892-5207

Copyright 2005, Rocky Mountain News. All Rights Reserved.

However, according to the National Association of Home Builder’s website, they predict rates to be 6.6% in 2007.

Is your rate too high? Get a rate quote on a Denver Mortgage Loan now!

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