As locals double down on their renovation plans for their homes and new buyers looking to make their first property purchase in town, Denver luxury real estate market experts are sifting through their files and data to predict how the local luxury property scene will run through most of 2017. The previous year saw exceptional growth and movement in the local scene, enough to raise concerns of another bubble coming up. Thankfully, 2016 an overall positive movement in the market, and many realtors consider it one of the best-performing years for Denver real estate.
Cautious optimism is still the name of the game for many real estate observers as the hype of the New Year dies down. With a new administration at the reins and more prospective buyers on the way, the general consensus for Denver’s luxury market state in 2017 is still murky. Nonetheless, experts are looking at several factors that may tip the scales one way or another in the coming months.
Eyes on Interest
During the last quarter of the previous year, home sales cooled down for a bit as real estate inventories tightened up. In return, prices for most residences have inched up slightly as well. The year ended with prices still creeping up as inventory remains tight in both single-family residences and attached homes (condos and townhomes) throughout the Denver metro area. What industry experts and realtors are keeping an eye on, however, are the interest rates.
Local industry observers agree that a slight increase of over five percent in housing interest rates will be enough to give the Denver housing market its first major sales slowdown in three years. The past few years have seen a rapid increase in value appreciation, hinting that bubble fears may not be totally unfounded. With inventory levels continuing to hit new lows and population growth high there would need to be a lot of large changes to slow the market down completely.
Sharing the Momentum
Denver’s real estate market has been the focus of realtors and luxury real estate experts throughout Colorado for the past few years now because it has been the center of the rapid post-bubble recovery in the state. It is the capital after all, so how its market is running is considered a benchmark of how markets in adjacent locales will work. However, real estate buyers are no longer concentrated just in the Denver area.
New data indicates that the previous year saw a major increase in home purchases along the Front Range, with a record 15.6 percent jump year-on-year in sold properties. Observers note the increased equity for Denver and Boulder residents, who then proceeded to invest their extra assets in vacation homes in nearby counties. Further market acceleration is foreseen in such areas as El Paso, Teller and Heurfano counties as the year rolls along. This trend may have also affect price appreciations back in Denver, but so far no tangent effect has been put forth.
Old House, New Rules
The main point of contention for some observers, however, will be the change of administration. The Trump administration promised sweeping reforms across all areas as they try to go back to a US-centric economy, and the real estate scene is not exempt. Just a few days ago the President signed an executive order cancelling the planned reduction in Federal Housing Authority mortgage rates that was laid up by the previous administration. The originally projected $500 annual mortgage payment deduction will no longer be in effect.
Despite the abrupt move, local realtors are not overly concerned about the administration making any major effect on Denver markets for the time being. So far, the cancellation of the mortgage rate deduction plan will not be much of a problem as it has not been fully implemented yet. Future administration moves are projected to have an effect on interest and buying rates, however.
The first month of the year is almost over, and already local real estate news makers are making cautious predictions about Denver’s luxury home market. Predictions are good, but these should not dictate how one plans to invest in a luxury home this year. Keep these predictions as a guide, but always stick close to expert advice from a local veteran real estate expert.