Real Estate News – What to Expect in 2020
The questions I’m asked most often these days are variations on the following: “How long is this strong market going to last?” “Are we at the top of the market?” or “Is the market going to crash any time soon?” This month I’m going to give you my thoughts on where I think we are in the market. The short answer is that we haven’t reached the top, and I expect the strong seller’s market to last for a good long while, probably several more years. Here’s why:
1. Inventory of Homes for Sale. The Denver Metro market has about 3.2 million residents. A community this size will have a balanced market when it has an inventory of 16,000 – 18,000 properties for sale. Today we have about 7,400 properties available; 5,300 Detached Single Family Homes and 2,100 Attached Single Family Homes, which is why it’s such a strong seller’s market. There are simply more buyers than sellers right now, which is leading to continued price increases. And it’s not just recently our inventory has gotten so low, it’s been falling steadily since 2007 when we peaked at over 31,000 properties on the market. In my opinion, the inventory of homes for sale is the single best indicator of how strong the market is. With such a low housing inventory, our seller’s market will continue for the foreseeable future.
2. Interest Rates. Interest rates rocketed upwards in the spring of 2013, and every real estate expert imaginable declared the era of low interest rates over. Well… they all got it wrong. Today’s interest rates remain near 50-year lows with the par interest rate hovering just above 4%. Many of the buyers who are taking advantage of these low rates have rented for the past several years and are now finding it more affordable to purchase a home than continue to deal with rent increases. To see if you should consider buying a home, check out this awesome calculator Trulia put together; www.trulia.com/rent_vs_buy and see what your best choice might be. According to the calculator buying is cheaper than renting in the Denver Metro after about 2 years.
3. Room to Grow. We still have lots of room for the market to grow and to sell more homes. Your Castle Real Estate did an analysis looking at the housing market for the past 44 years in order to see how we are faring today. The dotted line on the graph is the number of home sales we would expect in any given year based on the population of the Denver Metro. The solid line shows how many house sales there actually were every year. As you would expect, during downturns fewer people buy homes and during upturns more people buy homes. By looking at the chart, you see that we have had a fast rising number of sales the past few years up to 2018 and the number of home sales has settled down since then, but we do not appear to be anywhere near oversold given our increased population, like we were in 2004 for example. These long-term trends are often more important to consider than the short-term ones when it comes to real estate.
New Year, New Data – The New Turnover Rate Map Helps Our Agents!
As we move into a new year, Your Castle continues to develop new ways to help our agents, and you, buy and sell homes. The latest in a series of groundbreaking new ways to help our agents is our Turnover Rate Map. Many agents have asked me over the years, “Where should I farm?” The most important ingredient to that decision is locating where lot of homes are selling relative to the total number of homes in the neighborhood. We finally figured out a way to do that for all 500+ neighborhoods on our price change maps! Above you can see a sample of the results. The dark green areas (under 4%) are very low turnover and would be a hard area to farm. The dark blue areas have lots of turnover (11% or more) and would be a much better choice. This can help our agents better market your properties or to find an area that might be easier to find homes for sale. Curious to see what your neighborhood looks like? Ask me today!