The U.S. Census Bureau has kept track of home ownership statistics since 1965, which turned out to be the lowest percentage of any year at 62.9%. The highest level ever recorded was in Q2 in 2004, just a few years before the recession at 69.2%. The 53-year average is 65.2%. Q2 of this year came in at 64.3%, up from 63.7% in Q2 of 2017, as we distanced ourselves from the recession years. According to Zillow (which on occasion is correct) the all-important millennial segment (mid-20’s to mid-30’s) reached a homeownership rate of 36.5%, up from 35.3% in Q1 of this year. Millennials are recognizing real estate as a valuable investment, as they get married, develop families and create other household formations.
The economic laws of supply and demand are logical and consistent, which has created a current market based on solid demand and a limited supply of homes for sale. Two major reasons for this dynamic are; a growing population creating a need for increased housing construction to help with balancing the market. Another primary factor is that would-be sellers are staying in their homes longer. From 1987-2008, sellers remained in their homes for a median of six years, according to RIS Media. By 2014, sellers were remaining in their homes for 10 years, which is still the case today. A few reasons for this visible change are: 1) waiting for their equity to increase 2) concern about what to buy if they sell 3) may not be informed of available lifestyle options. Another reason is not feeling comfortable with a potential complicated process. According to a NAR (National Association of Realtors) survey, sellers judge and place high priority on five broker tasks: 1) marketing and exposing their home to the maximum amount of buyers 2) selling the home in the most reasonable time frame 3) pricing the home competitively without leaving money on the table 4) counseling to help prepare the home for sale 5) locating the best realtor to accommodate and address their concerns and goals. Reputation, trustworthiness, and experience were the most important considerations…and should be! Engaging the right realtor is a value proposition and will help you make, and save money, and your time! Something to keep in mind; although we are considered to be in a “sellers’ market”, once the property is under-contract, the power shifts more to the buyer regarding the inspection, appraisal, financing, and other due diligence factors, creating a balance to the transaction.
Rising prices and low inventory is leading to a decline of foreign-bought homes in America. According to a new NAR study, foreign buyers spent $153 billion in 2017 and are only on pace to spend $121 billion this year, however they do spend about 20% more per transaction than the average American citizen, buying in larger cities and resort areas. According to Lawrence Yun of NAR, this may be due to “the current haziness on immigration and trade”. Continued growth in high paying jobs and the stock market has fueled the luxury market. According to Realtor.com, the number of $1 million-plus transactions are up a significant 25%, year-over-year, with the average days on market only 105 days, 96 days in Denver, with high-end sales up 19%, locally reported by LIV Sotheby’s International Realty (LIV SIR).
LIV SIR also researched the full Metro-Denver market (all price ranges) YTD through July. These statistics revealed on-going price appreciation of about 10%, sales volume up 7%, new listings up only 1%, and the amount of homes sold was actually down by 2%. The luxury market has also been strong, but in a different fashion. The amount of sold properties (YTD) increased an amazing 20% (1,109 sales), new inventory rose noticeably 11%, and prices held at about the same level as last year at this time. The amount of inventory improvement is encouraging for buyers creating a better shopping experience.