Denver home buyers continue to fight for a limited number of properties available in the housing market. Year over year, inventory in April 2016 is down, creating even more buyer pressure and greater demand. We saw this same scenario last year, with low supplies and high demand. Even with slightly lower inventory numbers, there is good news on the horizon for buyers.
Year Over Year Trends
Looking at the sales trends through 2015, the pattern for the first four months of 2016 is almost identical. The good news, based on past performance, is the market starts to see more inventory in May, relieving some of the pressure and putting more buyers into homes. Looking further ahead into the year, as more inventory starts to hit the market, there is some normalization in demand and pricing.
Home Builders Helping
Other factors helping to normalize the market is the increase in new home construction. New home builders were caught flat footed when the Denver real estate market came alive, but they are now catching up with huge residential neighborhoods blossoming in the Denver suburbs.
Unfortunately, this isn’t the answer to all buyer woes, especially for the those in the lower price ranges. New home community prices are typically starting in the higher price ranges before adding a plethora of costs and upgrades, providing little relief to renters and first time home buyers.
Lenders Keeping Buyers in the Game
The Fed met and determined there would be no interest rate increase in June, keeping rates at historically low levels. This keeps many buyers in the hunt for their next home.
While interest rates are keeping buyers engaged in the market, an interest rate hike would likely help normalize the market and slow down price increases. Higher rates mean buyers don’t have as much buying power, and the whole system pulls back a bit. Unfortunately, this puts those at the lower end of the price range out completely. Yet, this reduction in buyers reduces some demand and makes purchasing in the Denver real estate market easier.
For Denver home sellers, this is perhaps the top of the market and now is the time to sell. Multiple offers and bidding wars are prevalent, even up to the higher price ranges. Buyers are coming in with all-cash and ridiculously high offers. Sellers still own the market today, but as the year unfolds, their dominating position should soften.
There is a rather distinct and somewhat predictable ebb and flow pattern of home sales every year. January typically starts slow, builds momentum through the spring, runs high through the summer and declines through fall into winter. The pattern is typically the same with variations in the highs and lows. This year promises to be another year of extremes, with a shift to a more normal market on the horizon.
Jim Brown is a Realtor® and agent success leader at Private Label Realty in Denver, Colorado. He advises, assists and mentors agents at all levels to help them succeed and grow their real estate business. www.JimBrown.me