Silly me. The I first time I used this title (coined by Mark Twain) was for an article I wrote back in 2003. And it’s been a fan favorite over time. I’ve often sent it to clients to impress the point that statistics too often tell what the author would like his audience to hear, not what they NEED to hear, and certainly not the whole truth. In these “us and them,” 24-hour news spin times select studies and sound bites make such misinformation almost acceptable. It has become (sadly) normal. But not for me! I’m a researcher, seeking the truth of the matter for the edification and wellbeing of my clients.
The matter at hand is the again changing real estate market. But know, THIS IS NOT 2008 all over again! In 2008, due to horrific games and greed on Wall Street and in the mortgage lending industry, we saw dramatic, even horrific changes causing widespread disaster for families and individuals nationwide, even worldwide. In 2013, with a great deal of government bailout, the pendulum began it’s swing back in the other direction. Now we’re seeing another change and hearing a lot of theories about what exactly is happening, why it’s happening and the likely outcome for the future. Please keep in mind that today’s news sources, or news “sellers” as I like to remind myself, LOVE sensational headlines. They print doom and gloom at every opportunity, and the happy news gets relegated to the back pages.
So here’s the good news, right up front. The real estate market in Denver and surrounding areas is super-healthy and will likely remain so for years to come, barring some dramatic shift in the national economy, a foreign incursion, or some other forceful change to the Status Quo. Yes, that could happen, but odds are greatly in favor of the SQ. Here is my reasoning.
- Colorado 2.9% unemployment commands rising wages to offset the increase in housing expense.
- Colorado Quality of Life far surpasses the majority of other locales with strong economies.
- Rising interest rates and home prices have made renting more affordable in comparison to buying (see graph) BUT rents will always rise over time, where home mortgages will not, and renters will never enjoy any equity position, let alone growing equity from ownership.
- New home permits continue to increase in number but that average selling price is now $621,000 compared to $427,000 for existing
Many of the bazillion apartments being built around metro Denver will convert over to condos when they hit seven years old (lookup Colorado Construction Defects law). This will be a great relief to all the apartment dwellers, though much later than needed, and will only be helpful to those who can and will live in multi-family communities. EVERY single-family neighborhood in Denver will see continued demand and upward prices until the next national recession at the earliest.
THE REST OF THE STORY
Buyers are certainly worn down by the rising prices combined with rising interest rates and so we are seeing demand relax against supply from what has been. In the last six months where all six metro counties were firmly in the “Seller’s Market” category, five have relaxed into “Balanced Markets” and one slipped barely into “Buyer’s Market,” that one being Douglas County where the median sale price is $495,000. The higher the price point, the softer you can expect the market vitality to be.
The next 4-6 months will likely remain more balanced than not, but don’t be surprised to see another lift beginning as early as March of 2019.