THE DENVER REAL ESTATE MARKET IS RED HOT AND NOT LIKELY TO COOL OFF ANYTIME SOON!
ANYONE LIVING IN OR MOVING TO DENVER HAS NO DOUBT HEARD STORIES OR PERSONALLY EXPERIENCED THE FAST MOVING REAL ESTATE MARKET. THERE ARE MANY FACTORS CONTRIBUTING TO WHY IT IS LIKELY TO CONTINUE FOR QUITE SOME TIME.
After the last housing downturn many people are cautious or downright scared of getting caught again. With any real estate purchase some caution can be wise, but sitting out this market could be very costly. Whether you are renting and want to buy or thinking about selling to buying your dream home while rates are low, there are many reasons doing it sooner rather than later is probably a good idea.
Inventory Levels are Historically Low
Inventory & Average Sales Price
Denver real estate inventory has dropped to historically low levels. There is a disproportionate ratio of buyers to sellers especially in home prices below $500,000. One home in Littleton that was listed at $250,000 received 47 offers according to the listing agent. Any the Denver luxury home market is picking up as well. Many luxury homes are selling much quicker than average. This may scare some, but armed with the right information, knowledge and professional assistance you can be successful.
These inventory levels are so low and our job market is so strong that even with a large number of new listings typical for the spring, Denver is unlikely to have enough homes coming on the market to return to a balanced market anytime soon.
Why is Inventory so low?
1. The Denver job market is exceptionally strong
Many companies are moving and adding jobs here that are good paying professional positions and they need places to buy. Companies like Charles Schwab, Lockheed Martin, Ball Aerospace, and many other companies are planning to move and add thousands of jobs in the Denver metro area. Denver has also become a hot spot for tech companies and startups looking for talent and an active city with great weather outside of places like San Francisco that have become too expensive even for professionals with high paying jobs.
2. Rents are rising
Rental rates are rising to the point where many can buy and have a monthly payment at or near their rental for a smaller home or apartment.
3. No new condominiums
If you have lived in Denver for a while you have probably noticed a lack of new condominium units for sale. Colorado’s laws have made it very easy for HOAs to sue condominium builders for construction defects and those lawsuits over the last decade have made it either impossible or too expensive for builders to secure the necessary insurance to build and sell condos. Instead they have been building apartments for rent. This lack of new condominiums in the Denver real estate market has meant a much lower level of inventory. State reform is being pushed those Senate Bill 177, but even when passed it could take years before the condo market begins to add inventory.
4. Low rate refinances
Many people refinanced with such low rates that they do not see a reason to do anything but enjoy their low payment and low fixed rate. Although rates are still at historically low levels meaning a move up is a wise decision if you think you want more home at any point in the near future.
5. The chicken and the egg
Which came first the sale or the buy? Many agents including myself have been hearing the same thing. “I would sell and move but I am afraid I will not find a home to purchase.” This fear is causing many people to sit on the sidelines and not make a move. There are options (Options to buy before you have sold blog post) that experienced agents can help with and plan to be successful but that fear is stopping many from even exploring their options. A successful strategy and proper execution can help you make that move and get your dream home while rates are so low. The upper price ranges are just beginning to get more movement so now is a good time to make that move up if you can.
What if the Market Drops Again?
Even if the Denver real estate market drops in two, three or more years. It probably will not be enough to erase the gains made over the next few years. Just like the stock market you buy a quality asset in a good position and hold on to make the most gains in the long run.
The same thing has been said about San Francisco for years and yet it keeps going. Denver historically does not have large drops seen in areas like Florida, Nevada and California. Usually our downs are much more moderate and we recover quickly. As long as you plan on owning for five years or more you should be able withstand and recover from market fluctuations. At the very least you are paying down a mortgage and enjoying a home that is yours.
Why is this Unlikely to End Anytime Soon?
Lots of new high paying jobs, nice weather, a growing downtown area and active lifestyle are big draws to the Denver area. Add to that an international airport, trails & parks, an educated workforce, proximity to skiing and mountain activities, a growing food and beer brewing culture and the conclusion is: don’t count on a slowdown any time soon. Even if interest rates do rise the Denver real estate market is still affordable compared to other major metro areas and it will have minimal impact.
Still nervous about the market and looking to explore your options? Get the answers with no pressure by contacting a Denver real estate agent.