Lists of listings
I know the above headline sounds redundant. Just check out the number of 2007 year-end real estate listings in a variety of mountain towns as reported by the Rocky Mountain Resort Alliance.
Neighboring Grand County had far and away the most listings at the end of 2007, with 4,176. Of those, 1,784 were single-family homes. The average sales price was $497,500, compared to Steamboat's average sales price of $803,000.
Other year-end listings totals included: Aspen, 1,041; Whistler, B.C., 599; Park City, Utah, 2,902; Summit County, 3,240; Sun Valley, Idaho, 1,611; Telluride, 629; Teton County, Wyo., 409; and Vail, 1,782.
Understanding mortgage rates
The Federal Reserve slashed the Fed Funds rate by three-quarters of a point to 2.25 percent last week. But don't expect mortgage rates to go down as a result.
"This action is likely to drive up mortgage interest rates," said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers.
When the Fed lowers interest rates, they encourage more borrowing and spending in the economy. This has the potential to artificially drive up asset prices and cause money to lose its purchasing power, Nicholas said. This phenomenon is known as inflation and scares bond market investors.
"Fixed mortgage rates are tied to the mortgage-backed bonds that trade on the bond market," Nicholas said. "Inflation erodes the value of bonds by reducing the purchasing power of the income stream associated with the bonds. This causes bond investors to sell out, which drives up bond yields and mortgage interest rates."
The good news, however, is that the bond market has already priced in an inflation premium as mortgage rates have ticked higher in recent weeks. "Mortgage rates started their upward climb in January after reaching a two-year low point, and they are unlikely to go much higher from their current levels," Nicholas said. "Of course, if inflation fears persist, the markets will react accordingly."