One of my favorite (reality-based) quotes is “The only thing that is constant is change.” I first learned this from an economics professor at DU and have heard it many times since. Whether it’s technology, weather, your family, employment or interest rates, they are all subject to evolve, grow, fluctuate or simply change. Over five years ago, I saw a report stating technology has advanced a million times over during the prior twenty years. As I was wrapping my brain around that, the report predicted that in the next twenty years, advancing technology will progress by a billion times.
Through the 4th quarter of last year, most economists predicted (mortgage) rates would increase to between 5%-5.5% by the end of 2019. By early spring, rates settled close to the 4% range and will likely stay below 4.5% into the third quarter. Current economic conditions, including national and local forecasts, suggest a steady growth outlook into the foreseeable future. The real estate market shall remain healthy, however, prices will increase at a slower pace, while staying noticeably in front of inflation. With current rates at a temporary low level (4%ish), and available “for sale” homes increasing, we have moved into a (surprising) perfect storm. Lower mortgage rates are helping buyers qualify for more home, making a difference in the low to mid-price ranges. And, of course, buyers in the mid-upper price levels love lower payments as well.
Our current economic climate would suggest the advantages of looking at owning a second home (vacation or rental) and the inherent long-term benefits. According to a survey by the National Association of Realtors (NAR), 49% of vacation homebuyers use their property as a family retreat and for regular vacations. Many homeowners earn rental income when not enjoying it themselves. NAR research shows 45% of property buyers purchased second homes to generate income. When ready for retirement, many will move into their vacation property to enjoy their desired lifestyle.
This is also a good time to invest in a local rental property. Low interest rates and premium rents are a good formula for your real estate portfolio. An experienced broker can help you become educated and assist you in qualifying for the best investment for your personal situation. Long-term, the correct property investment can be the gateway to an improved retirement, future investment opportunities, and even fund a college education. Personally, I had one rental home for over twenty years. Upon selling it, I paid for two sons’ college educations.
There has been much written about the lifestyles, habits and cultural propensities of our country’s millennial demographic. It is important to learn this generation’s attitudes and inclinations to become effective and of value to those clients.
But, apparently…I am a baby boomer. There are more than 75 million of those babies in the U.S. and should also be acknowledged and understood for their lifestyle needs as they address their changing world. Here’s an attention getter: boomers represent 70% of the nation’s disposable income and are more affluent than past generations. Nearly 75% of boomers currently own their home and believe where they currently live is not necessarily their best option and may be looking to improve their lifestyle.
Boomers are setting new trends as they defy traditional definitions of a relaxed retirement. They are looking for more “smart” homes, amenities, good walkability locations, an active and entertaining lifestyle, and usually desire to be easily accessible to family and friends.
LIV Sotheby’s International Realty just released market metrics for Metro Denver (all price ranges). Year-to-date comparisons to last year show the number of properties sold was down 2%, with the average price per square foot up 5%. The average days on market rose from 29 to 36 days and we have 5% more new listings than last year.
The luxury market (above $1 million) compares a little differently over the last 12 months (year-over-year). The number of properties sold was 10% higher (1,749) with prices up 1%, average time on the market fell below 100 days, and there were 9% more available listings. We currently have a healthy, more balanced market for both buyers and sellers!