I can remember back in 2005 when sales began to slow and prices stabilized then began to decrease. I could tell within 60 days that the market had changed and that we were in a downturn. I had no idea how deep and long it would be, but I knew something had changed. I get the distinct feeling that the real estate market is beginning to change again and this time for the better.
Home prices in Denver may increase but not the number of sales.
Our market is as simple as supply and demand. In recent months the number of homes and condos for sale has drastically decreased. One reports shows homes inventory in the Denver area is down 37% from last year for single family homes while condo inventor has decreased 50%. In addition to a decrease in inventory, there has been an increase in pending sales. I have had several clients in multiple-offer situations on homes already this year. Even crazier has been that the clients bid above the asking price on those homes and still came up short compared to other offers.
Interest Rates Remain Low on Denver Mortgages.
Another factor in our housing market has been low mortgage rates. I have seen buyers lock on 30 year loans below 4% on fixed rate mortgages. As rents continue to increase and mortgage rates stay low, it will continue to create demand on housing. For most people it is less expensive to buy a home than rent. I believe that when we begin to see a slight increase in mortgage rates there will be an even larger surge of people wanting to buy before rates get any higher.
Consumer Confidence and Jobs are beginning to help.
When people feel better about their future and the economy as a whole, they are more likely to make large purchases and decisions like buying a home. I think most of us are hesitant to say things are getting better but there is at least a sense that things aren’t getting worse. Even Fox News is optimistic on Denver’s Housing Market.
I understand that many of these reasons for an optimistic outlook are anecdotal. In 2005 I could not prove to anyone what was about to happen but I knew it in my bones. I feel the same way in my gut about 2012 being a turning point for the good. We will not know for sure until 2013.