Fantastic FallLIV Sotheby's
Denver enjoyed very brisk real estate sales from early spring through June of this year. July and August were predictably strong, however not at the frantic pace experienced in recent prior months. And then came September, where we saw a desired level of economic balance between the supply and demand for homes.
During the steaming hot spring market, Denver Metro averaged a record low of 4,500 – 5,000 available homes for sale. Since Labor Day, the number has ranged from 6,700 to nearly 8,000 homes on the market. This welcomed increase in available homes for sale is creating a more balanced local housing market. We are conditioned to expect the proverbial end-of-season slow down after the summer months, however, this change of season is presenting pleasant opportunities for homebuyers. If you are hunting for a new home, there are significant advantages for the homebuyer this season:
- You can likely avoid the multiple-bid minefield. The low-inventory market, earlier this year, generated challenging bidding wars for buyers. This fall, buyers face less competition while Denver’s increased supply of homes provides a nicer shopping experience. Case in point; this past week I showed buyers, from out-of-state, homes in several urban Denver neighborhoods. Prior to arriving in Denver, a few of his new company workers warned him to be ready to offer at least full price, as he will likely be in competitive situation. I was happy to suggest that they could relax, have a nice variety of homes to tour, and could have a pleasant (less anxious) home buying experience. We found at least 15 homes to see, narrowed the field down to three and successfully negotiated on their first choice…a very good experience.
- Enjoy a better year-end tax break. Consider the allowable deductions for mortgage interest, closing costs and property tax deductions.
- More potential bargaining power – with less buyer competition and more available inventory, negotiating with sellers wanting to sell their homes before year-end could result in achieving a more appealing value. Most of this year’s price appreciation took place from the end of January through June.
- And with interest rates still hovering around 4% (until a little later this year), combined with the considerations above, the real estate climate is currently easy to predict…A Perfect Fall Storm! And, you can be in a new home for the holidays.
Finally, lenders are easing up on mortgage lending requirements, according to Fannie Mae’s 3rd quarter Mortgage Lender Survey. Overall, these lenders anticipate that the easing of credit standards, together with low mortgage rates and a strengthening of the labor market, will benefit and support the housing market.
Locally, Denver’s economy grew at a pace of 6.5% in 2014, which is nearly triple the average rate of the national average, which came in at 2.3% last year. “Although home prices continue to outpace wage growth in the majority of local markets, our analysis is somewhat surprising, showing that affordability is actually improving in most markets, thanks to falling interest rates and seasonal slowing of home price growth”, as reported by Daren Bloomquist, VP at Realty Trac.
Nationally, buying a home today is 48% more affordable than during the 2006 initial housing bubble. Over the last 10 years, buying a home was at its most affordable level in the first quarter of 2012.
With regard to home values in Denver, according to the S&P/Case Shiller Home Price Index report, Denver rose between 8.4% – 10.3% (year over year) each month from January through August. Denver values went down (a little) every month from 2009 through 2011 until January of 2012, when values started rebounding and have continued through August 2015.
History, combined with current trends in the real estate market, provide a realistic basis for projecting (even conservatively) a solid, balanced, and healthy housing market into the foreseeable future.