Colorado House Finders

The Cherry Creek neighborhood in Denver was one of the top neighborhoods searched on the Colorado House Finders website last month.  Since Cherry Creek was one of the most popular neighborhoods searched, we felt it appropriate to provide our in-state and out-of-state visitors a more in depth view of the Cherry Creek Real Estate market.

The boundaries for the Cherry Creek neighborhood are bordered by East 6^th Avenue (North), East 1^st Avenue (South), University Boulevard (West) and Harrison Street (East).  The Cherry Creek neighborhood is a blend of old and new with homes representing architectural designs from every decade since the beginning of the 20^th century.  However, over the years the Cherry Creek real estate market has changed from smaller single family bungalows to luxury detached and attached single family homes and high-end condominiums valued at over $758 to $1,000 per square foot, such as those found in the North Creek complex at 1^st and Detroit.

The high level of interest in the Cherry Creek neighborhood is due in large part to peoples’ attraction to the community’s eclectic amenities, such as the diverse restaurants, art galleries, clothing boutiques, coffee shops, hair salons and evening venues.  In addition, the Cherry Creek neighborhood is bordered by the Cherry Creek mall, a major commercial retail center anchored by Saks Fifth Avenue, Neiman Marcus and the newly constructed Nordstrom and 160 other shops and restaurants.

Cherry Creek is definitely one of the most unique 10 block areas in Denver offering amenities to accommodate any lifestyle.  This is one of the main reasons for the double-digit increases in home values over the last few years and will be for many years to come.  If you are interested in knowing more about the Cherry Creek community and Cherry Creek real estate, please contact Colorado House Finders at info@coloradohousefinders.com.

Dr. Ben Bernake and the Federal Reserve have cut short-term interest rates for the last two consecutive months by a total of .75% in an effort to prevent the U.S. economy from slipping into a looming recession. Since most consumers do not understand how short-term interest rates actually impact their ability to borrow money, these rate cuts often create a common misconception that a decrease in the Federal Funds Rate translates to an equal drop in mortgage interest rates when these cuts often cause the latter to rise. 

There are two primary interest rates controlled by the Federal Reserve that dictate the overall cost of borrowing money on a short-term basis: the Discount Rate and the Federal Funds Rate. The Discount Rate is the interest rate the Federal Reserve Bank charges member banks when these institutions borrow money from the government. The terms of these loans are usually no longer than 30 days and generally do not have a direct impact on the consumer. The Federal Funds Rate is the interest rate that commercial banking institutions charge each other over night for the use of Federal funds to meet their individual reserve requirements. This interest rate tends to impact the individual consumer and the economy as a whole over time more directly. 

Mortgage interest rates, on the other hand, are determined by the trading price of mortgage-backed securities and fluctuate based on the performance of the bond market. The 30 year fixed rate mortgage tracks the yield on the 10 year Treasury note and usually runs about two percentage points higher than the 10 year Treasury yield on any given day. In accordance with basic rules of supply and demand, when investors purchase mortgage bonds the price of the securities increase, causing yields and interest rates to drop. Conversely, when investor appetite for mortgage-backed securities decreases, bond yields and interest rates rise as the bond prices drop. 

Over the last few months bonds have been favorable investments in light of the credit crisis caused by bad loans, a weak labor market, and a slow housing market, and as a result these soft economic indicators long-term mortgage rates have seen steady declines. Since the Federal Reserve leverages rate cuts to stimulate economic growth, there is a good possibility that investors will abandon conservative bonds and seek out more aggressive variable rate investments (i.e. stocks) as soon as recession fears pass, causing bond prices to drop and mortgage interest rates to rise. 

Our goal is to give you the tools necessary to be an educated buyer.  Please contact us at info@coloradohousefinders.com if you have questions about this or any other topic related to the buying or selling real estate in Denver.