Customers and Clients are always asking me, “What’s going to happen?” Let’s take a walk down Memory Lane. If I ever live long enough to develop a subdivision, it will have the street name of Memory!

This week is about external factors. You know; the stuff we can’t control in Colorado; Denver or even your own neighborhood. When one studies current economic conditions globally, and then by country, state, city and then neighborhood, it’s easy to see we have so much external pressure just waiting to BUST us. Being 500 miles from nowhere, Denver tends to think of itself as an island, BUT… Guess what, we are not! Legislation, attitudes, beliefs and global tension can all sneak in and ruin our party out on the plains and up into the foothills.

Now, I’m not saying all these #BlackSwans are going to jump out of the pond and happen all at once. Over years and a number of market cycles we’ve learned it is “never just one thing”. It is the layering affect. Like baking a cake. A bite from interest rates, weak economic news, a market crash on Wall St., a war, energy costs, affordability, and on and on and on. As the layers of sediment build up, the impact on our local economy becomes sluggish. Fewer buyers show up at our doorsteps, and the “look out” starts to send warning signals. We saw a market like this one in late ’70s and into the early and mid ’80s. Ferocious demand ’76, ’77, ’78 and so on. Subsequently tamed by higher rates and then over supply changed the way we started looking at the market. In some neighborhoods, you could have purchased a home 1982, and 10 years later, in 1992 you might have barely been able to get out of it with any gain at all. In 2004, you could have purchased a new home in the ‘burbs’, loaded it up with cheap debt and suffered through years of very nasty market conditions.

So, why is this cycle anything like these past cycles. Well, it is, and it is not. During this cycle, most of these run up years have been punctuated with strong down payments, equity and expansion in this market. On the other hand, we continue to see these layers move into our market. One at a time, lining up, they threaten the SELLER’S market to which we’ve built a love-hate relationship.

So, what’s my prediction? I believe our market will balance preventing the pendulum from swinging too far in the OTHER direction, but it will move toward a balance. I believe this will start to show up between now and the November Elections. Watch this closely. We should move toward at least a Month’s Supply of inventory by Mid-Summer. As Buyer Fatigue, the constant friction from interest rates, energy costs start getting a firm grip on home budgets and the inevitable tax increase, the layers will start to build up enough resistance to cause supply shortage to slowly drift a Balanced Supply. Now, don’t get me wrong, we have a very well educated population in the demographic group thirsting for homeownership. We have a more senior population aging in place. Finally, for today’s conversation, I don’t see builders becoming the supply source they became in previous cycles. Our land and its development costs are just too high!

Let’s stop here Denver, and let’s get back to what happened in the last week.

Next up, what has happed to the total number of active listings in the last week? The graph below will give you a hint. Last week we had 1,239 Active Listing and today we have 1,347. Is this our swing toward balance?

Only time will prove one’s story, but I believe this story is well sourced, quickly presented and relevant. Please enjoy…tc