Welcome to the Real Estate Market Midyear Report! Here’s What We’re Seeing:
Average Home Price: The average price of a home in metro Denver leapt another 12 percent in the past 12 months. I believe 2015 will continue to play out very strong and here’s why: The number one driver of home price change is the amount of inventory on the market. Our market inventory continues to drop, down another 17 percent from this time last year for single-family homes (down 19 percent for condos and townhomes!). Until inventory comes back on the market there will continue to be tremendous upward pressure on prices as demand outstrips supply. Where will the new supply of home inventory come from? It won’t be bank-owned properties and shortsales. The metro Denver economy is strong and unemployment is low so there will be very few distressed properties on the market for the foreseeable future. The additional supply will eventually come from home owners who finally realize what a great market it is to sell and decide to put their home up for sale. When this will happen is anyone’s guess. We’ve seen very little evidence of home owners making this realization so far, as evidenced by the continued lack of inventory on the market. Sooner or later though inventory will begin to appear. That’s your sign of a changing market. But this might take several more years which is why prices will continue to rise strongly.
Number of Homes Sold: Because there of homes sold is actually going DOWN year over year, not up. There were 9 percent fewer homes sold in June, ’15 than June ’14 simply because there is no inventory to sell. It’s the very definition of a seller’s market.
The Condo/Townhome Market: Incredibly enough the condo market is doing even better than single-family homes! Prices are up 16 percent in the past year and inventory is down 19 percent creating a blistering hot market for attached homes. Just like for the single-family home market I don’t see any evidence this will change any time soon. Until more condo inventory comes on the market prices will continue to rise. Expect strong price increases for the next several years.
Denver is still a great place to invest in real estate. The fix and flip market is strong for those who can find underpriced 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 rise – a record 10.8 percent per year the past three 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.
To learn more about what your home is worth, please contact me for a complementary confidential consultation! 303-807-3289