Why Would You Move?LIV Sotheby's
Over the past few decades people typically have moved about every seven years. That average has increased nearly 30%, mainly because of the recession (2008-2011). People have stayed in their current homes longer than usual, even though personal and family needs may have changed. Denver has experienced somewhat of a slow economy since 2001, eclipsing with the national recession, until the beginning of 2012 when it became one of the first cities to lead the country past the recession. Housing values in Denver have increased over 25% in the last three years and continue to enjoy a promising economic outlook. There will be a positive economic impact due to a recovering housing market as we transition to more normal conditions and higher levels of activity. The increase in home prices is helpful to a homeowner’s net worth, which needed to be repaired from the wealth declines associated with the recession.
The National Association of Homebuilders is forecasting 25% growth for single family construction starts, rising to over 800,000 in the U.S for 2015. That is encouraging, however construction stats have been consistently in the neighborhood of 1.5 million per year when the country is healthy.
The Case-Shiller Home Price Index Report revealed (on 2/24) that the metro- Denver resale prices rose 8.1% from a year earlier. According to CoreLogic, the national average for home price appreciation was 5.7% during the same one year period. The Case-Shiller index targets 20 cities to pull information from, with Denver ranking third in annual growth rates behind San Francisco (9.3%) and Miami (8.4%). Of those cities, Chicago had the smallest growth rate (1.3%) with Detroit being the only city still below 2,000 levels.
One in three U.S households say they plan on moving in the next 5 years, as reported by the Demand Institute after conducting a survey of 10,000 households. As confidence in the economy improves, people making significant financial decisions will feel more comfortable about meeting their housing needs and desires. A healthy economy, a good real estate market and low interest rates are energizing them to address stagnant living situations. Lifestyle changes may include new marriages, children, schools, empty nesters, retirement and divorce. According to the survey, characteristics deemed most important included: amenities/services within walking distance, good schools, a shorter commute to work, diverse neighborhoods, and public transit. The survey identified important amenities such as grocery stores (short drive), restaurants and cafes, parks, retail businesses, and health care services.
So, who are all these people that are moving? Fortunately, the answer is diversified and not dependent upon a small factor or narrow segment of the market. First-time home buyers are increasingly active with well-employed millenials entering the market. Historically, the average age of a first-time homebuyer is 32, which is traditionally when marriages and families evolve. With home values rising at a steady rate, homeowners have experienced the rebuilding of their equity (no fear of a bubble market), allowing them to think more freely about housing options. A large segment of this group are the Baby Boomers (many empty nesters) who are considering changes to meet new housing needs. Younger professionals and Baby Boomers are, in many ways, viewing their housing opportunities in similar fashion. Denver is a fabulous example of a metropolitan area embracing the concept of re-urbanization, providing desirable options. We will continue to see more Towncenter’s develop with retail, entertainment, restaurants, and much more enhancing and stimulating new, as well as older established residential neighborhood environments.
The luxury market (over $1 million) is improved and positioned to stay healthy as inventory is still falling below buyer demand, but average days on the market has dropped from 240 days to sell (in 2009) to just over 70 days in 2014.
In Denver, the real estate message is: if you are interested in moving, need to address family needs, or perhaps enticed by a different lifestyle, then as long as you are comfortable with your finances…take advantage of a growth market, take advantage of current interest rates, and most importantly make yourself happy!
To access current market reports visit www.coloradomarketreports.com for archived reports. For more information, contact downtown managing broker, Steve Blank, of LIV Sotheby’s International Realty at 303.520.5558¬. To service all of your real estate needs visit www.livsothebysrealty.com.