How will the financial crisis in Europe impact Denver Real Estate?

With the crash of the European economy,what is going to happen to real estate prices in Denver now? With the roller coaster ride we have been on lately, it is no surprise that this latest concern for the economy, this time from Europe, will havean immediateimpact on the American economy, and at an even more local level, here in Denver.

To answer this question, you have to look no further than to what happened at the end of last week. In case you haven't noticed, interested rates are falling, no, tumbling. We are once again seeing historic lows on interest rates and while we expected to be back in the 6% range by the end of the year, it now appears that we might remain in the 4% range forthe time beingas European money keeps flooding into our markets, keeping rates low. This is great news for homeowners who thought they missed the refi boom of last year. And even better news for home buyers. An extra half percent lower interest rate can make a huge difference on what a buyer can afford and the amount of home they can expect to get into.

A general rule of thumb holds that every one percentage point decline in mortgage rates is the equivalent of roughly a 10% reduction in the home price for the buyer. So, if the current rates hold, say economists, that could help stabilize prices and allow current homeowners to sell existing homes without substantial price cuts. Since rates started falling last week, I have already been getting more calls from my buyers ready to get back into the search and I have seen a steady increase on showings across the board. When you consider the amount of money a 1% decrease in interest rate is over the life of a 30 year mortgage, it makes the $8,000 tax credit look like peanuts.

If you have been on the fence, now is the time to buy. And sellers, the same is true, so get your house ready and on the market. For a great article that explains this economic impact in further detail, click here.