Some of you may be considering a move in 2019 so we figured it’s a good time to provide our Scoop readers with a market update. You may have heard or read things regarding the Denver market lately but here is our take on it.
This isn’t an all-inclusive report with stats to make your eyes glaze over, it’s just an overview of the market based on our activities on the “front line”, helping buyers and sellers with their moves. Once you review it if you’d like to discuss any questions you have or get a game plan in place for a move in 2019, we’re here and happy to help.
Let’s dive in…
What are the big trends in the real estate market going into 2019?
↑ Interest Rates Over the past year interest rates have risen, reducing the # of the qualified buyers to buy homes. Rates are in the high 4% range and many expect low 5%’s this year. (Side note…no one knows for sure, these are educated guesses)
↑ Home Inventory The # of homes actively listed for sale in the Denver area market has risen roughly 40% from this time last year. More options for buyers!
↑ “Days on Market” This is the amount of time it takes from when a home goes for sale to when it goes under contract. Homes are staying on the market roughly 10% longer than they were a year ago. Many Denver homes sell in 1-3 weeks but on average now it’s taking 40 days to sell.
↓ Home Sales Volume The # of home sales has decreased from a year ago by 23%. We attribute this slow-down in sales to buyers being priced out because of rising interest rates coupled with rising home prices.
↑ Home Prices Home prices have continued to rise, going up 3.9% over the last year on average in Denver. This is a slower pace of appreciation than we’ve seen over the past 5 years.
Buyer “Take- Aways” from these Trends
- Buyers will have more home options to choose from! If you were looking to make a move over the last few years but got aggravated by how quick homes sold you may have more luck in the new year.
- Buyers may have a little more time to consider a home before making an offer. Not comfortable making an offer 2 hours after you see a home for the first time? It’s understandable. On well-priced listings that show well you’re still going to need to move quickly but buyers may have a little more breathing room this year.
- Buyers should have a little more leverage in negotiations with sellers in some scenarios. We don’t think we’re seeing a flip flop from a “seller’s market” to a “buyer’s market” because inventory levels (the # of homes available) are still historically very low. That said, the number of available homes is rising and if interest rates continue to rise that would mean less qualified buyers to purchase homes. When sellers have less buyers making bids on the homes that gives buyers back a little taste of leverage they haven’t had in years.
- Buyers may not always have to pay full price. Oh the market is changing, does this mean I can start low-balling sellers? It just means as a buyer you should know where you stand when making offers. Is the house you’re making an offer on a beautiful home that’s well priced and in a great school district? You may still be competing and that offer probably needs to be strong to win. Is the house in poor shape, on a busy street and it’s been on the market 2.5 months? You probably have some wiggle room on price on that one, you don’t need to come in guns blazing with the over asking price offer. Know where you stand before you offer & adjust your aggressiveness accordingly.
- Buyers should be sure they’re pre-qualified with today’s interest rates before home shopping. Rates have gone up. Time to update your loan prequalification letter and make sure you’re looking for homes in a price range you can afford. If you’re building a new home that will take 9 months to complete have you budgeted for an interest rate increase over that time? Seems like a wise move, just in case.
Seller “Take-Aways” from these Trends
- Sellers should price the home in the middle of the value range based on recent comparable sales. The great news is homes are still selling quickly and for great prices when they show well and are priced right to start. When sellers shoot too high on their starting price, we see decreased showings, price reductions and low appraisal issues. Price the home right to start and you’ll be much better off.
- Sellers shouldn’t expect multiple offers on every listing. There have been years in Denver real estate where it seemed like every listing had 3-10 offers in the first weekend. That’s not the case right now, although it still happens on some listings. Increased interest rates and increased home prices have lowered the pool of eligible buyers, so it makes sense that bidding wars are less common.
- Sellers wanting to sell homes that have “challenges” may want to sell them early in 2019. A home with a “challenge” is a home that has something that puts it at a disadvantage to other similar homes. For example, maybe the home is on a busy street. Or maybe it’s a home that has 2 bedrooms when most of the others in the area have 4. These types of homes sell better in markets with low inventory because buyers don’t have a lot of other options to turn to. If home inventory continues to rise for a while these homes with challenges aren’t going to sell as easily. (which will likely mean price reductions later)
We hope you found some value in this quick update on the market.
We have a few thoughts to pass along before we go. It’s pretty simple advice, but we always come back to two key suggestions for homeowners. First, you should be a homeowner for the long haul. Real estate, like the stock market, will have its ups and downs but in the long run it’s been one of the biggest builders of wealth available. Second, you should own a home that you can afford, even when life throws you a few financial curveballs (as it’s prone to do sometimes!). If you follow those two suggestions, we think homeownership is a great path for our clients.
Real estate is not a “one size fits all” deal and this was just meant to be an overview of some of the big trends. If you’re considering a move this year and you’d like some personalized assistance we’re here and happy to help. I can always be reached at firstname.lastname@example.org.