I’ve been reviewing the last ten years to make sense of it all. Sometimes, when one is in the trenches day in and day out, it becomes difficult to see the forest for the trees. With a little investigation, however, there is much to be learned from this chart.
During 2010, we had an incredible incoming supply of New Listings, but our lowest level of demand was fueled inventory into 2011. As we came out of the national recession, demand started to increase. By 2013, “peak demand” had occurred, BUT, by 2014, inventory had declined to a point where we have now arrived at the start to a new year with limited supply and what appears to be insatiable demand.
Now, this is data from the 6 major counties surrounding Denver and not extending into Boulder on the north or El Paso on the south.
So, I’m going out on a limb, and I will unequivocally predict that demand will continue at current levels, but I think this year will see inventories increase around the edges. Why?
Three main factors for more inventory and a slow down on price appreciation.
- Interest rates are going to inch up. This will take some buyer’s out of the market.
- Affordability issues have already started to make an appearance. In lower price ranges, buyers are already renting or staying in their rentals rather than “fight the battle”.
- Last, but not least, new inventory is making its way to the market. Builders are catching up with demand. “Flippers” are not seeing the profits once found from their sinister acts. This inventory may make it “as is” to the market for those adventurous owners. And finally, this is my own opinion, the “Boomers” are going to finally give up on homeownership. They will move to assisted living, in with family or out of state.
None of these items are going create huge margins of inventory, but they will make a dent, and we will take a “breather” for 2018. With that being said, there will still be plenty of enclaves attracting multiple offers. Close in 1st Tier communities will enjoy stronger demand than more removed 3rd Tier locations with longer commutes and builder competition.
With all this being said, Homeownership is an important component of any family’s pursuit of stability. This chart of Average Sales Price over the last 10 years speaks to this well.
Embrace the market. Now is the time to be a buyer, and it is still a great time to be a seller.