The notion that we are experiencing a “perfect storm” for buying a home may have lost some of its wind with consumers, given that the notion that the confluence of low interest rates and housing prices has been trotted out so many times in recent years. Yet, empirical evidence suggests that the perfect-storm scenario is currently in place, which bodes well for buying a home in the Denver area in 2012.
Mortgage rates are at or near historic lows, still hovering below 4 percent for a 30-year, fixed-rate loan for qualified buyers. If you don’t plan to stay in your home that long, and you are willing to bet that your home is going to appreciate, it also could be a time to lock-in an even lower adjustable rate mortgage, or ARM.
Sales were up slightly last year from 2010, and home prices basically held steady. That was not the case in many markets across the country. Denver consistently ranked in the Top 5 markets last year in the 20 markets tracked in the closely followed Case-Shiller Index.
Meanwhile, the Denver area currently has an unemployment rate of 7.7 percent, well below the national rate of 8.5 percent. But what Denver’s housing market experienced last year was a never seen-before phenomenon. The housing inventory, the number of unsold homes on the market, fell by more than a third from the previous year. The last time there were fewer homes on the market was in 1999, when the Denver-area was almost 20 percent smaller than it is today.
The low inventory, combined with a small uptick in sales, has resulted in less than a 4-month supply of homes on the market. For comparison, in June 2006, when the housing market in Denver and across the nation was so hot that many observers, rightfully, it turned out, feared a bubble was about to burst, there was about a 6-month supply of unsold homes on the market. A rule of thumb is that a 6-month supply of unsold homes is a market in equilibrium, which favors neither the buyer nor the seller. Anything less than a six-month supply is a seller’s market, in which the homeowner is holding most of the cards.
YEAR END 2011 DENVER MARKET WATCH In Denver’s market, the law of supply and demand is not taking place, at least not overall. Prices are steady, but at the lower-end of the market, there is more competition, with some bidding wars erupting. At the top of the housing food-chain, there are still far more homes for sale than people willing to spend $1 million or more on their castle, so prices continue to fall.
When you throw foreclosed homes and short-sales into the mix, it has kept the lid on the overall market. What that means for prospective buyers and sellers, is that this is not the year to contemplate a real estate transaction on your own. Whether buying or selling, you will need the help of a qualified Realtor more than ever, given the unique conditions in the market.
And keep in mind the old saying about Denver weather: If you don’t like it, wait a few minutes and it is bound to change. Even a perfect storm can change on a moment’s notice.
The HBA of Metro Denver believes it has a lot to crow about in 2011. It appointed veteran builder Jeff Whiton as CEO and successfully endorsed a number of candidates for mayor, including Michael Hancock in Denver. To read the entire story, please go to this link: http://insiderealestatenews.com/2012/01/hba-highlights-of-2011/\
The improved housing market is one bullish sign for the Denver economy in 2012, notes economic development guru Tom Clark. To read the entire story, please go to this link: http://view.exacttarget.com/?j=fe601678776701797711&m=ff02167075660d&ls=fdec1375716c037e75127573&l=fe981573756d027f77&s=fdf415757d6c057e71107975&jb=ffcf14&ju=fe2f17727067067f731578
A Denver company sees value in medical office buildings. Fleisher Smyth Brokaw was a partner in a $41.25 million to acquire five buildings from Centura Health on its hospital campuses in Denver and Littleton. To read the entire article, please go to this link: http://insiderealestatenews.com/2012/01/fleisher-smyth-brokaw-partner-in-41-million-deal/
A Broe Group affiliate showed confidence in the northern Colorado economy by buying 320 acres from the Eastman Kodak Co. in Windsor. To read the entire article, please go to this link. http://insiderealestatenews.com/2012/01/broe-affiliate-buys-kodak-land/
The Denver-area housing market, by many respects, ended 2011 in better shape than in 2010, boding well for 2012. The big news was the lack of inventory. Earlier in the year, the conventional wisdom that just the opposite would occur and the market would be flooded with shadow inventory. To read the entire article, please go to this link: http://insiderealestatenews.com/2012/01/home-market-improves-in-2011/
The FHA has changed its mind about flipping, which is good news for people looking to make money by buying bargain-priced homes for a quick profit. To read the entire article, please go to this link: http://money.cnn.com/2011/12/29/real_estate/FHA_flipping_waiver/index.htm
In the latest sign that the worst may be over for the nation’s construction money, construction spending on all types of real estate is up. This is considered not only good news for the construction industry, but the entire economy. To read the entire article, please visit this link: http://realtormag.realtor.org/daily-news/2012/01/04/construction-spending-rises-hopeful-sign-for-economy
The worst appears to be over the new home-building market in the Denver area. Permit activity has been rising each month since April, shows a recent report. To read the entire article, please visit this link. http://insiderealestatenews.com/2011/12/new-home-market-improves/
Case-Shiller ranked Denver No. 1 of the 20 major cities it tracks each month. While many markets are still struggling, Denver appears to be poised to show some real, overall appreciation. To read the entire article, please visit this link: http://insiderealestatenews.com/2011/12/case-shiller-denver-no-1-by-one-metric/
Brookfield, which already owns the tallest building in Colorado – downtown’s Republic Plaza – has bought the second tallest, 1801 California, in a $215 million deal. To read the entire article, please visit this link: http://www.costar.com/News/Article/PSEG-Energy-Sells-Denver-Office-to-Brookfield-for-$215M/134581