This year, it seems that bankers, mortgage brokers, economists and other real estate professionals are being asked more about the current and expected health of our real estate market. In large part, these inquiries have become more prevalent because the current economic cycle is stretching beyond the typical six- to seven-year cycle.
The short answer is that nationally or locally, nothing dramatic is going to take place. The real estate market is considered healthy, although not as robust as it had been since 2012. For six years, the real estate market has demonstrated above-average strength, yet never came close to being out of control — thus avoiding declining values. Prices have become somewhat softer but will still increase well above the rate of inflation.
It may not be a smart investment strategy to sit and wait for prices to drop, trying to buy low in the next cycle. The fact is that many of these investor/buyers have already been waiting several years longer than expected. Waiting too long results in missed opportunities. During that time, real estate has noticeably appreciated while the bystanders regret missing the economic upswing, frustrating their long-term financial goals.
As a broker, one of my challenges is to help clients determine the best time to place their home on the market. Over the years, I’ve adjusted my opinion from avoiding certain times (like over the holidays). I’m now placing more emphasis on what the best or most appropriate time might be for the client. The real estate market obviously has less activity in December than in April. However, even though there are less buyers looking, there are also fewer available homes for sale, which can be a competitive advantage. Denver is a bit seasonal until the market perks up around the end of January; but also remember, homes sell every day of the year.
I’ve modified my thinking on this subject primarily due to the internet (as it never sleeps). It doesn’t matter if buyers are out of town, entertaining family or under a foot of snow, they can still see your home online and set a showing for any day of the year.
Your broker should take their fiduciary client relationships most seriously. We should be committed to providing an excellent job of counseling and assisting our clients, as this will likely be their largest financial investment. This includes demonstrating the necessary skills and ability to provide them with a higher real estate IQ to help them navigate the buying and/or selling process. This should include “market” intelligence, “technology intelligence” and emotional support. Collectively, this means we need to have a deeper understanding of our client’s needs and varied interests to best support their interests.
If you are wondering what to expect over the next year, here are some predictable trends:
• We are toward the end of an economic cycle, but most economists suggest only a mild recession.
• Interest rates are currently very low and are not expected to move much in 2020 — maybe a half percent up or down.
• Zillow, Urban Land Institute and others are suggesting that annual home appreciation will vary but generally be in the 2 to 5% range, with Denver hovering closer to 4%.
• Builders have not been able to meet demand but are increasing construction of much-needed affordable homes.
• The number of home sales will increase slightly as will the inventory levels (4 to 5% increase in Denver for 2019).
LIV Sotheby’s International Realty just released its October market report for metro Denver, (all price ranges) year-to-date compared to YTD in 2018. Total sales volume was 6% higher; the amount of properties sold rose 3% to 45,689; prices were more than 4% higher; and new listings increased 4%. The same metrics (YTD) for luxury property (over $1 million) reported both sales volume and properties sold had an increase of 14%, yet appreciation was 1%, with inventory levels increasing nearly 20%.
And for a different (second home) view, the National Association of Realtors recently reported the nation’s most popular vacation home counties. Of the top 25 vacation home counties in the country, the least expensive counties were in Maine and Missouri while the most expensive was Nantucket, Mass. Colorado has five of the 10 top positions with Pitkin, Jackson, Grand, Summit and Eagle counties leading the way. Of course, that makes us proud but probably not surprised.
LIV Sotheby’s International Realty, the exclusive Board of Regent for the Who’s Who in Luxury Real Estate, has 23 office locations in metro Denver and surrounding areas, including Boulder, Castle Rock, Cherry Creek, Denver Tech Center, downtown Denver, Evergreen and the resort communities of Breckenridge, Winter Park, Dillon, Crested Butte, Telluride and the Vail Valley. For more information, call 303-893-3200. To service all of your real estate needs, visit LIVSothebysRealty.com.