Although 2018 is in the rearview mirror, there are history lessons to help enlighten our perspective entering 2019. After inflating our financial hopes, the stock market ended 2018 down after a rockin’ roller coaster ride. Metro Denver real estate has enjoyed a solid six years (2012-2017) of consistent price appreciation of +/- 10%, annually; until 2018. RE Colorado reported the annual price appreciation for last year at 8.3%…still pretty darn good.
Many media headlines too often paint a picture designed to grab your attention with significant facts and pertinent information buried in the news story. Teaser headlines like, “Is this a bubble market”, “The hot streak is over”, or have “buyers missed their opportunity”, all create unnecessary anxiety.
In nearly 50 years, Denver has only experienced deflated values two times. Once from 1985-1988 and more recently from 2008-2011. Prices, in general, slipped 10-20%, and by the summer of 2013 had eclipsed values from 2007. The average price of a home in Denver was $83,000 in 1980…and currently in the $500,000 range.
Stocks, bonds, annuities and similar financial vehicles are part of the conversation for most investors. Real estate opportunities are of course the other major investment avenue. Owning your home should definitely be your first clear choice. Conventional wisdom suggests to “diversify,” particularly if you are worried about stock market fluctuations. Locating the right financial counselor is as important as finding the right lawyer, doctor, CPA or real estate broker. And having too much cash in the bank means you are constantly losing money to inflation. An old adage, “the higher the risk, the higher the profit” typically rings true. I’ve had relative success in the stock and bond markets, which is also where I learned (several times) that money can actually disappear. It may be rather obvious, but property is a hard asset that has lasting value! Demand for real estate will always exist! Waiting for the perfect moment or hoping to time your investment choice(s) to coincide with any market fluctuation may not be ideal for your family’s needs and long-term financial goals.
Real estate projections remain positive for 2019 with prices rising but at a slower rate. Zillow recently forecasted the home price index for Denver will rise 6.8% this year, with national projections closer to 5%. New construction levels remain well below historical averages as builders struggle with land, labor and material cost issues. Mortgage rates temporarily dipped to the +/- 4.75% but you can expect rates to hit 5.5% by year end with 6% possible by 2020. US population growth has increased 6% since 2010, and 13.2% in Colorado, creating demand for housing.
The take-away for the Denver housing market is a more pleasant and balanced market. Sellers may have to prepare more to get their house ready for sale and price it closer to what the market will permit, while the buyer will be able to shop with much less stress.
Whether you are a buyer, seller, or both, when the market slows…the best realtors will shine.
For many who entered the business over the last few years, this changing market becomes overwhelming. Long-term minded Realtors welcome changes and anticipate them. The most straightforward of transactions contain a multitude of variables that must be coordinated for a successful outcome. Every transaction contains different personalities, motivations and needs that go beyond the contract, showings and inherent negotiations. Your home may likely be the most expensive investment you ever make. Technology is important and necessary; however, it is only a tool to assist you. Working with a well-qualified realtor should absolutely include the “human factor” that is comfortable for you and your family.