Short-term interest rates are inching their way north, but have not (yet) significantly impacted long-term mortgage rates. The 30-year fixed rate is about ½ – ¾% higher than last year. Nationally, according to Lawrence Yun, (chief economist for NAR), “prices are still rising steadily in lower price brackets, but starting to level off for pricier homes”. The three hottest markets are Seattle (13.1%) appreciation year-over-year, Las Vegas at 12.7% and San Francisco at 10.9%.
Although Denver is ranging between 9.5%-10.5% annual appreciation, questions as to whether Denver is approaching a “bubble” market…are not even a possibility. Cities like Phoenix, Las Vegas and Miami from 2004-2008, were experiencing annual appreciation of 25%-35% while constructing homes and condos at an accelerated (no end in sight) rate. Thus the “bubble” burst! Denver is pleasantly moving along at a +/- 10% appreciation and is barely building half the supply we need to meet current demand. Nationally homes are selling in an average of 54 days (a Realtor.com record). Cities like Seattle (24 days), San Francisco (25 days), Salt Lake City (26 days) and Denver at 25 days, are leading the way. New listings in Denver year-to-date (YTD) are up a total of 1%, compared to mid-year in 2017, as reported by LIV Sotheby’s International Realty (LIVSIR) based on research from RE Colorado MLS information. Total sales volume is 6% higher than 2017 (YTD) with prices up over 10%, while the number of sales were down 4%. The luxury market (over $1million) is quite interesting in comparison. LIV SIR reviewed the last 12 months (year-over-year) at the end of June and reported luxury listings were a healthy 14% higher, with the number of properties sold increasing 17% to 1,661 sales annually. The average days on the market dropped 13% to 96 days for a luxury sale, but the average price increase was stuck 2%; great opportunity for the luxury buyer.
According to Paychex (the leading payroll services provider for small and mid-sized businesses), Denver ranked #1 in job growth and #3 in wage growth, while, millennials garnered much of the employment opportunities. According to PEW Research Center, there are 71 million millennials in the US, representing about one-quarter of the nation’s population. The top states for millennials, according to the US Census Bureau are: Washington is #1 for net migration, followed by Texas and Colorado. This movement stems from the growing tech centers where Seattle and Denver shine.
What about “20-somethings” who have graduated college? Zillow analyzed census data (from 2016) finding that 28% of recent college graduates lived with their parents, as compared to 19% in 2005. In the early-mid 2000’s, housing was more available and less expensive…hence, parents are a good, but hopefully temporary, option.
With interest rates (still) at historic low levels, you may consider following a dream of owning a second home and/or an investment property to help you reach your personal, or financial goals and objectives?
A second home or an investment property can be two completely different subjects… or the same thing. Many purchase a rental/investment property, rent it out for a period of years and move in when they are ready, whether it was a local or resort-type community where they plan to retire. Most second home buyers (whether using it for pleasure, as a rental, or both) are typically in their 40’s and 50’s. Great reasons to purchase rental property are 1) long-term appreciation 2) comfortable retirement 3) income 4) tax benefits (check with your CPA). You may purchase a second home property for rental income, for personal vacationing, (or both), retirement and/or as a family legacy property for all to enjoy.
Unless you own a magic wand, purchasing an investment property is likely the most lucrative, and maybe the most enjoyable path to financial security. Call a trusted or recommended real estate broker to learn about desired options.