While forecasting the performance of any real estate market is never an exact science, the 2017 Colorado housing market delivered some pleasant surprises. Despite encountering some major economic events, including the presidential election and the market being faced with rising interest rates, (both occurrences of which have the potential to greatly affect market trends), the 2017 real estate market came out on top, demonstrating increases in sales and price values throughout the state. Though the outcome of the 2018 real estate market will likely also be a challenge to predict, by examining the results of 2017’s market performance, consumers will be better prepared to identify trends and make sound real estate decisions in the new year.
‘So-Low’ Unemployment Rate
One major factor that attributed to the benevolent 2017 housing market (and one that is likely to drive 2018’s as well), is the national unemployment rate riding a 17-year-low of 4.1%. In 30 of the 50 largest U.S. cities, unemployment is half that of 2010 levels. Colorado’s economy continues to show strength as the state’s unemployment rate hovers between just 2.1% and 2.8%.
In contrast to the loose lending habits made by many financial institutions that contributed to the housing recession of 2008-2011, today’s real estate market is characterized by actual prudent lending and low ‘for-sale’ inventory levels across the nation. In Denver, record high inventory levels were recorded near the beginning of the recession in 2007, eclipsing 29,000 available homes. Today, the metro area fluctuates between 5,500 and 8,500 homes for sale- a much more balanced marketplace.
Millennials Take Ownership
Many Millennial buyers entered into their primary home buying years in 2017, and will continue to do so in 2018. 2017 saw more job security (and better wages) for Millennials, better qualifying them for mortgages and low down payment options. Due to employment figures steadily improving for millennials over the last five years, the demographic consequently makes up 52% of current home shoppers, according to National Association of Realtors.
Market Success in Resort Areas
With 2017’s stock market run-ups, many Buyers in Resort communities throughout Colorado took “paper profits”, and turned them into “hard assets”, like real estate. Additionally, 2017’s 10-year-low in inventory caused continued upward pressure on desirable properties, which contributed to the resort-areas’ real estate success that occurred last year. In 2018, strength in the domestic market will continue, as opposed to in some international markets, like Venezuela, where purchasers are now selling due to turbulence in the country.
No matter what your real estate goals are in 2018, now is a good to time learn everything you can about the market, past and present, in order to make the best decisions in real estate.