Cocktail ChattablesAmanda Molitor
The 2019 Denver Metro real estate market moves forward and continues to improve at a healthy, but slower pace. That perspective compares the current market to the record-smashing (2013-2018) years of the recent past. We are now able to enjoy, and hopefully appreciate a more predictable and steady market. By combining statistics from the RE Colorado MLS with further research by LIV Sotheby’s International Realty (LIV SIR) we gain a realistic view of current and potential housing expectations. By averaging price ranges (single-family/with condo sales) and comparing information between September 2018 to September 2019, we find sales increased from 3%-6% (via 3 different surveys). “New” listing inventory is 5% higher, giving buyers more homes to view – while days on the market increased about 25% from 25 to 32 days before selling. The luxury market (above $1 million) has been developing in positive fashion, with luxury prices increasing a modest 2%, but the number of sales rose an impressive 10%, totaling 1,940 in that time period, while new listings were up 15% from a year ago; making it more competitive for sellers while buyers are enjoying more selection.
Available inventory was “relatively” low over the past few years indicating sellers might be in the driver’s seat, however that is not the case. It may no longer be a seller’s market, but do not consider this a buyer’s market either. Additional “for sale” inventory means it takes longer to receive an offer and buyers can more comfortably shop for a new home and negotiate with sellers a little more this year. In August, 37% of properties sold (all price ranges) had price reductions prior to receiving an acceptable offer. If you want, or need, to sell rather quickly, price your property at market value, or even a little below. Many times, sellers wait too long testing the market before reducing price and ultimately receive less than what they may have achieved with proper evaluation.
As reported by bizjournals.com, there are 48% more renters (nationally) who earn over $100,000 annually, then 10 years ago. Denver leads the country in growth of high-income renters due to the strength of our local economy; experiencing 146% growth in this interesting category followed by Austin, TX, at a 142% growth factor. The average rent in Denver is currently $1,520/ a month. But for those with the income and an appetite for higher rents, the new Pullman, a 168-unit apartment building near Union Station, rents start at $2,785/ mo. for 819 sq. ft., the rents average $4,200 to $7,500 for most units, eclipsing at $20,000/ mo. for a penthouse. Purchasing a new home may not be for everyone, however it may reflect how much flexibility one might require, versus what is the financially intelligent decision. If you are comfortable being here for 3 years, it would favor purchasing over renting, especially with tax advantages.
As more economists predict a recession sometime next year, there are likely many potential buyers wondering if now is a good time to purchase property. If there is a recession, how long might it last and what effect will it have on real estate? The last recession saw housing prices decrease 5%-20% in most of Denver Metro (from 2008-2011), but we were the first city nationwide to eclipse 2007 prices by June of 2013. That was the only time Denver experienced any price drop since the mid-1980’s. Nationally, housing prices stay pretty static through a more normal recession.
Investors look for a return on their money. Money markets may get you a quarter point and even the yield on a ten-year treasury isn’t breaking 2%. An easily leveraged illustration suggests that if you purchase a $600,000 home, with 10% down ($540,000 loan), at a high of 4% over 30 yrs. is a principal/ interest payment of $2,576/ mo. plus taxes and insurance. If you do choose to own, target markets that are constantly in demand (lucky Denver). During a typical recession, Denver has seen softer prices on a temporary basis but has always been one of the cities to rebound first with improved values. An old famous saying was “you make your money when you buy “…even if we have a mild recession, it may just may be an opportunity!