Real Estate News
Welcome to the real estate market midyear report! Here’s what we’re seeing in today’s real
estate market.
1.
Average Home Price:
The average price of a single-family home in metro Denver went
up another 6.8 percent in the past 12 months,
hitting $454,771. This is a lower price
increase than the previous 3 years but still a strong move
forward.
2.
Inventory:
I believe 2017 will continue to play out very strongly
because the number one
driver of home price change is the amount of inventory on the market. Our market
inventory continues to be near record lows, with only 7,081 single family homes on the
market as of June 30 (16,000–
18,000 is considered a balanced market). However, there
is at least a glimmer of hope for buyers because this is 4.1
percent more inventory than
there was a year ago. Are sellers starting to put more property on the market for sale?
Will this begin to satisfy the overwhelming demand we’ve seen from buyers the past
several years? Will the market begin to move to greater balance between buyers and
sellers? Only time will tell and it’s still WAY too early to predict. What is certain is that
until more inventory returns to the market there will continue to be tremendous upward
pressure on prices as demand continues to outstrip supply. And where will the new
supply of home inventory come from? It won’t be bank-owned properties orshortsales.
Denver currently has the lowest percentage of distressed (bank-owned and shortsale)
properties among the largest 25 cities in the U.S. The metro Denver economy is strong
and unemployment is at a record low so there will be very few distressed properties
coming on to the market for the foreseeable future. The additional supply will eventually
come from homeowners who finally realize what a great market it is to sell and decide to
put their home up for sale.
When this will happen in earnest is anyone’s guess.
We’ve seen very little evidence of homeowners making this realization so far despite the slight
uptick in June’s inventory.
Sooner or later though additional inventory will begin to appear. That’s your sign
of a changing market. But this might take several more years
(personally, I believe it will take another 3-5 years) which is why prices will continue to
rise strongly in the meantime. Stay tuned and touch base with me anytime you like so I
can keep you posted with the most current data!
3.
Number of Homes Sold:
Because there is so little inventory in our market the
number of single-family homes sold is actually going DOWN year over year, not up. There were 1.3
percent fewer homes sold in June 2017 than June 2016 simply because there is so little
inventory on the market.
Amazing.
4.
The Investor Market
: Denver is still a great place to invest in real estate.
The fix and flip market is strong for those who can find under priced homes to buy and repair.
They’re out there but it takes tools, patience, and work to find them. Once you get one fixed up,
selling is the easy part because of the lack of competing
inventory. The buy-and-hold market will continue to be extremely profitable for long-
term investors. Interest rates and vacancy rates are still near record lows and rents continue to increase
– an astronomical 40 percent the past 4 years!
It’s not difficult to buy a rental property in today’s
environment and put it on the path to be paid off in 12-15 years.
Just think how your life would change if you owned a couple of rental properties free
and clear! For building long-term wealth it’s tough to compete with rental property ownership.
That’s the one thing that will never change.
