Last year’s metro Denver residential real estate market had a “Play it again, Sam” kind of year. It was surprisingly like 2015 … and very much like 2014, for that matter.
The last three years have been characterized by:
• Home price appreciation near or above double digit rates
• Record numbers of resale homes changing hands
• Historically low levels of homes available for sale at any one time
Here are the actual numbers*:
The average sold price for a single family home was $438,609 in 2016, while the typical multi-family residence sold at $286,380.
How about 2017? Will the market be playing the same tune at the end of this year? Probably.
The reason is simple: Fundamentals.
There isn’t anything on the horizon that looks like it will change the fundamentals:
• The metro Denver economy is stable and healthy with no one forecasting a downturn.
• Jobs are being created and the economy is diversified in several different sectors.
• Population growth remains strong. Colorado added about 100,000 people in 2015 and right at 90,000 in 2016 with roughly 65% of those people coming from net in-migration (the rest is simply due to births exceeding deaths). The new Colorado residents represent 23,000 to 26,000 new households (at 2.5 people per household). So, demand for housing is strong.
One factor that might negatively impact housing prices and trends is interest rates. Industry prognosticators have been predicting that rates would rise for the last several years but they have not done so. They seem bound and determined to continue making this predication until it comes true! Eventually, rates will rise.
The effect of rising interest rates may be offset, however, by gains in income. Even if mortgage rates rise a full percent (more than is forecast), the cost of a $250,000 mortgage goes up by only $1,788 per year. Median wages have been rising at about $2,400 per year and these higher wages more than offset the increased house payment.
Good News: CHR agents have best practices they can use effectively in these current market conditions, especially in helping buyers deal with the low inventory and bidding wars. These strategies help buyers win the multiple offer battle and get into the homes they want.
If 2017 is a repeat of the markets we’ve had in 2014, 2015 and 2016, we are well positioned at CHR to help buyers and sellers be successful.
Here’s looking at 2017, kid!