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Denver Market Update

Denver Market Update

Real Estate News – April 2018

How’s the real estate market, you ask???

There are many different factors and metrics I can discuss when assessing our market, here are just a few:
1.    Rising home prices
2.    Overwhelming consumer demand for homes
3.    A lack of inventory for sale
4.    New construction not keeping up with demand for housing
5.    Musings from the Whitehouse
6.    Rental prices skyrocketing
7.    The effect gas and oil prices have on housing
8.    How low interest rates are continuing to make housing relatively affordable
9.    What parts of town have appreciated more than others over time
10.    Bitcoin. Blockchain and all things indecipherable
11.    And on and on and on…

But the thing I like to do most when explaining our real estate market is to show folks the chart below. Truly, a picture is worth a thousand words. Please take a look at it and begin to absorb what it’s telling us. Everything you need to know about our current real estate market is contained in this chart…

What you see are two lines, a solid one and a dotted one. The solid line shows the inventory (i.e., the number) of homes for sale in metro Denver every month from January 2008 to January 2018. The dotted line shows the number of homes sold every month. You can see that the inventory peaked in July 2008 above 25,000 homes for sale. That was at the depth of our economic and housing downturn, when fear ruled our market, banks were being shut down, our local and national economies were in shambles, unemployment was rising, and consumer confidence plummeted. The result of course was that people didn’t want to buy homes; they were afraid of the future and didn’t want to take on any risk. On the seller side of the equation, many home owners were getting caught with rising monthly mortgage payments as their Option ARM mortgages adjusted upward, so suddenly they wanted to sell at the very worst time possible. The perfect storm.

It’s simple economics: if you have more supply than demand prices start to fall and that is exactly what they did from 2007 to 2009. Around 2010 and 2011 the market became roughly balanced with 15,000 to 20,000 homes on the market. But as you can see the market did not remain balanced for long because the supply continued to fall.

Which brings us to today’s market. In January 2018, there were fewer than 5,000 homes on the market, the fourth January in a row of near record-low inventory! This lack of inventory defines our current housing market.

The past several years have seen an incredibly strong real estate market in metro Denver and this chart helps us understand why. The supply of homes has vanished, placing an imbalance in our market. No three dimensional, super-fancy, econometric model can do a better job of explaining the imbalance in our market than this simple chart.

It’s interesting to see that while the solid inventory line has dropped dramatically the past eight years, the dotted number of sold properties has barely inched upward, even though our population continues to rise about 1.5 percent per year. This tells me that our demand for housing is going to stay very strong for the foreseeable future.

So, how do you use this information? It depends, of course, on who you are and what you’d like to do. Here’s a brief sample:

If you own a home and are thinking of moving:  It’s an incredible seller’s market and you can expect to get top value for your home. You’ll need to consider the purchase of your next home though, and make sure you have planned the process correctly so you find the home of your dreams and make the transition from your current to future home seamless.

If you are renting:  Rents continue to zoom upward to all-time highs so you might want to get out of the rental rat race and buy a home. Inventory is low so you’ll need to make sure you’re prequalified to buy a home and come across as a serious buyer, otherwise sellers won’t even consider your offer. But because inventory is still so low we expect prices to continue to move up for several years, at least until the inventory balances with the demand. So you can expect appreciation in your home purchase for the next several years.

If you’re considering buying rental property:  There’s no better way to build wealth than owning rental properties for the long term. Home prices have risen, but so have rents, and interest rates remain near record lows. Smart investors don’t try to time the real estate market; it’s as difficult to do as timing the stock or bond market. The vast majority of Americans who have built wealth as real estate investors have done it buying rental property and having their tenants pay it off for them over time. It’s not complicated and it works.

Of course, everyone’s situation is unique. If you want to talk about how best to take advantage of our real estate market and see what it can do for you please give me a call. I love helping people!

Thank you!

As always, we’d like to take a moment and say thank you for your business and referrals. Every client is special to us and it’s a pleasure and a privilege to serve your real estate needs. Please feel free to contact us anytime if you have any questions or thoughts about the real estate market.

If we can help you in any way, don't hesitate to contact us!

Testimonials

“Drew is a very comfortable person to talk to. He is very knowledgeable about the market. I think he did a great job of getting me into a home that I like and for a great price.”

Brett G.

“Drew remembers everything and is always upbeat.”

Lois G.

“From the start, Drew did a great job listening to our ‘wants’ for a house and taking them into account. We appreciated how proactive he was in offering alternative properties to our original list of homes. He was extremely patient throughout the entire process. He knew how best to go about making an offer and his knowledge of the market ensured that our offer on the house was accepted. We may have put a slight strain on the process by bringing in our own inspector, but in the end, it work…

Danielle and Sean C.

“Working with Drew was an absolute joy. He excelled at walking us through the purchase process, keeping us well informed and he calmed us down when we hit snags along the way. He has a positive personal demeanor and cared about meeting our needs. If you need a down to earth and very professional Realtor, Drew is your guy.”

Scott and April B.

“Drew was great to work with. He came highly recommended by my co-workers. This was my first home-buying experience and he made the whole process run smoothly. I felt he really listened to me and what I was looking for and only showed me condos that met my criteria. He was very good about keeping me updated and easy to get a hold of any time I had a question or concern. He was there through the financing and actual signing. Not only was he professional, but he is also a genuinely nice guy who …

Eva S.

“Overall, everything was great. You really made an effort to fully understand what we were looking for. I can’t really think of anything to improve on.”

Derek and Jessica L.

“Drew was extremely professional, well organized and efficient. He has a top notch support team, which makes the buying and selling process a very positive experience. Most importantly he takes ownership in what he does and treats your worries and concerns like his own. He is so knowledgeable, that he has a very calming influence, in what is usually a tumultuous process. These are only a few reasons why Drew is in the Top 2% of agents nationally. Thanks for all you did Drew, I really had fun w…

Mike D.

“Wow! Drew was so professional and really kept us in the know, especially after we moved. Since we had relocated to another state and left our home vacant, we were quite nervous. Drew sent us regular e-mails advising us of any showings, feedback or interest. When our offer came, his negotiation skills and advice were second to none. He did everything he could to make sure we sold our home for a price we needed. We would highly recommend him to anyone that is buying or selling a home.”

David and Tiffani F.

“We have purchased 4 homes with and without an agent, without question Drew is the best real estate professional we have worked with. He is first class in every way. Drew understands your needs because he listens. He also has an impressive network of related professionals to help complete the necessary transactions. Drew truly has a heart for what he does, and those he does it for.”

Alfonso and Taña T.

“I can’t imagine selling any property without Drew at the helm. He is a captain of real estate. He knows every nuance of the business and communicates it well.”

Sandie J.

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