As the national economy steams along with no signs of slowing, the real estate market seems to have shifted gears once again. With speculation that the Denver real estate run is over, there seems to be evidence the party is still going. Is it possible for the market is still hot as ever?
The National Economy Sets the Stage
Regardless of the ongoing turmoil happening within the Federal government, the economy continues to boom. The big news from April is a whopping addition of 263,000 jobs, pushing unemployment down to a 50 year low of 3.6%. Consumer confidence is up, as are retail sales. Inflation remains stable, and the Fed currently shows no signs of increasing interest rates this year. These are all positive signs.
With a decrease in interest rates to the same levels we saw a year ago, lenders are again able to offer refinancing to homeowners who never took advantage of the historically low rates. This is clearly good for buyers as well, as it provides more purchasing power in light of rising home prices. Top this off with the Fed showing no signs of increases, we should see this carry through the rest of 2019.
Higher and Higher We Climb
Looking at home prices in the Denver Metro area you would think the party never ended. According to statistics from REColorado, the median price for a detached single family home in April set another high at $443,000, a 1.8% increase from the same time last year. Regardless of inventory levels and interest rates, price is one factor that has continued to edge upward consistently over the last several years.
A common question heard around town is “will the price increases ever end”? With certainty the answer is yes. But not this year. We have, however, seen a slowdown in the pace of the increases. As the influx of new residents slows and home builders continue to make progress in catching up to demand, home pricing will adjust accordingly.
What’s Hot? What’s Not?
In Denver real estate we have seen several years of an unbridled market, where every price point and home style has been selling as fast as agents could list the properties. More recently, there has been a lot of discussion about the market shift, and there has definitely been one. While the shift has had some effect across the board, the effects have not all been equal.
On the higher end, properties between $500,000 and $1 million are on the market longer. Inventory is up, creating a lot of competition, giving buyers many more choices. At this level there are also a lot of new builds competing for buyers. Given the choice between an existing home with it’s typical wear and tear, compared to a brand new home with financial incentives, buyers are pausing to consider their options.
The under $400,000 level is running strong. Continued price increases have put many homes out of the buyer’s reach, creating a big universe of buyers for the moderately priced homes. This has helped jump start the condo and town house market, but single family homes still had less than a month of inventory on the market in April. As the market continues to shift and slow sales at the higher price levels, the more affordable price levels will remain hot.
The Band Plays On
The national economy is booming. The local economy is strong. The Denver housing market has seen some change, but is still in great shape. Although rising prices for all products and services is causing some people leave the state, Colorado is still one of the most desired places to live in the country. As long as we continue to see growth, the housing market should stay the course and thrive.