Best of Luck,
Century 21 Tenace
Let's see, Denver never really had the steep run-up in values, experienced by much of the country in the early and middle 2000's.
Why? We were tech heavy in the 1990's. When the .com's fell off the cliff in 2000, many of our good jobs went with them. We started our recession in early 2001 and never really recovered.
Remember how we led the nation in foreclosures for much of 2006-2010? That was a result of lenders and builders trying to keep their volume up and ride-out the downturn with exotic loans made in 2001-2006. Those loans came due 3-5 years later. People that were betting on appreciation to bail them out paid a heavy price through foreclosure. Then, add insult to injury, 2008-2009 became our double dip, while the rest of the country was seeing this major recession for the first time.
Now here we are, with huge pent-up demand (think 10 years worth), low relative prices (about even with the 2005-2006 highs, when we were just bumping along the bottom 3%-5% appreciation), historically low interest rates (people are finally beginning to understand these rates can't last forever), with most homeowners who bought after 1998 without enough equity to come-up with a new 20% down payment after the cost of sale from their present home andâ€¦
Well, you get the idea, the perfect storm; lots of Buyers, no inventory and a crazy feeding frenzy.
Of course it doesnâ€™t hurt that weâ€™re still an Oil Patch State, albeit a minor one. If you havenâ€™t noticed, the oil industry is doing just fine, thank you very much.
At least that's my story, I'd love to hear yours.
Dave Cox, GRI, CNE
P.S. Of course, I heard Rush said it was a Democrat conspiracy, so what do I knowâ€¦
Based on that, I see the biggest factor as the shortage of new rental properties (availability) vs. the increase in demand (population increase in Denver). This is pushing up the average rents over 10% annually for the last two years. That combined with what's occurring nationally, historically low interest rates. The gap between the cost to rent vs. the cost to buy is widening as interest rates keep going to new lows. As people started learning that they could save more money through buying a home instead of renting, it brings us to the 3rd aspect of this formula, the one that drives the capitalist system (supply vs. demand). Since the 3rd week of February last year our market has seen the supply of homes drop at an incredible rate, by late October we had about 70% less available homes than we had in February.
Thereâ€™s another aspect to this formula. As you head down in price from $500K you see increased demand, and therefore increased price compared to last year. As I see things, there are about 7 buyers for every home under $500K, 15 buyers for every home under $250K, and almost 30 buyers for everything under $100K. The reason for such high action at the lower price points has to do with investors jumping in the fray with the first time buyers moving out of the expensive rentals. With the rental market being on fire and interest rates hovering around 0%, people with cash (who think they can make some quick cash) are taking it out of the bank and putting it into real estate.
Luckily, for the owner occupant buyers, most of the foreclosure properties have a period where investors are prohibited from making an offer. This is making foreclosures much more attractive for owner occupants and helping them find a place before the frenzy of investors can get in. Iâ€™m putting more buyers into bank owned properties every year and really love the opportunity that they get from this 7-15 day period. It also makes it almost impossible to find anything in the single family detached category for investors that will make them good money. Iâ€™m staying with higher price points and multi-units with my investors.
Thanks for reading my post, and please feel free to contact me with any questions or concerns.
During the crash of the economy, many homes lost value and many sellers were suddenly under water with their mortgages. At the same time, the banks stopped releasing foreclosed homes at the previous rate. Thus, the inventory became very low and it became a supply and demand situation favoring the sellers. We now have pre-qualified home buyers and a veritable plethora of investors coming the market for homes. There are now multiple offers on homes at all price ranges when they are in good condition and priced correctly. Plus, most sellers, who are now in a good position to sell still have not gotten the memo or they are afraid to make a move.
Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
I don't know why sellers aren't getting the message ... it is a SUPER time to sell a home, at least in the Denver, CO, Metropolitan area. Julie Montgomery, RE/MAX Masters, Inc., Greenwood Village, CO http://www.jmontgomery.com