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Reaction to Doom and Gloom Denver Post article

I wanted to address an article that was in the Denver Post on Monday morning.

The co-founder of Your Castle,┬áLon Welsh, had this response…

“If you are a new research company, the most reliable way to get a lot of very free publicity is to make dire predictions about the future.

As they say in the publishing business, if it bleeds, it leads. Everybody loves bad news. This is why this article got so much attention.

I think that it is very difficult to predict when the next recession will occur and the magnitude of the correction, if any, that will take place next time. As an investor, I would rejoice to see a 20% correction, because that would mean a lot of bank foreclosures and amazing investment opportunities like we had in 2010 through 2012. There is no way that I will be that lucky twice in one lifetime.

It does seem reasonable that we could go into a recession in 2019 or 2020. I think that you will see appreciation come to a stop for a few years and then it will resume at a more normal rate of 6% per year. Barring some 9/11 disaster, I would anticipate that the next recession will not lead to any material decrease in prices.”

For additional support of Lon’s opinion, look at this chart…

In 2008, we had a HUGE amount of inventory (~25,000 active homes vs 5,000 sales) which was the bubble that popped. Look at where we are now. In January 2017, we’re basically even with active inventory and sales. There is no inventory and therefore no bubble. As Lon said, barring a 9/11 type event, there is no reason to think that the housing market in Denver will go down in the near future.

Why?

  • Our housing demand is high
  • There’s no housing inventory
  • Our population continues to grow
  • Our economy is strong

These factors equate to stable or increasing prices for the near future.

If you have any thoughts, concerns or questions, don’t hesitate to reach out to us! We’re always available to discuss the market or your situation specifically.

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