Market Conditions
There has been a great deal of discussion among agents as well as builders and lenders over the past several weeks regarding the present state of the market and expectations going forward. There is consensus that we are presently seeing a bit of a “pause” in almost all segments of the market where things have slowed down from the unsustainable break neck pace of the past 12-18 months. The theories for this "pause" include: a “normal” seasonal slow down, anxiety about the election, burned out buyers taking a break, and the chasm between buyer and seller expectations. While all of these are contributing factors to some extent, I put the most stock in buyer fatigue combined with expectations and underwhelming inventory.
What will the market look like in 2017?
This article from the Denver Post, What is “high plateau” and what does it mean for the Denver housing market? (Aldo Svaldi | July 2016), does a nice job summarizing what I expect going forward. While I don’t see a bubble like we saw in 2007-2010, I think the term “high plateau” is a good descriptor of the current conditions. Other key points to consider:
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We are still under supplied with quality inventory but are starting to catch up with demand. Continued migration to the front range will be key to sustaining any continued growth in appreciation.
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Interest rates are also a factor. Conventional wisdom states that as rates rise there is downward pressure on pricing, however, in this environment of record-low rates, modest .25% to .5% rate increases have the opposite impact and pull buyers off the sidelines in the fear that rates will continue to rise. If mortgage interest rates increased 1% or greater and held these gains for a sustained period, this would start to impact prices but the effect would not be immediate.
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On the more positive side, there are other reports that place our markets as some of the best in the country. The recently published VeroFORECAST predicts substantial gains in our area, and while I do agree with their “geographic polarization” thesis, I think another year of double digit gains is optimistic.
Every property and sub-market is unique. Please don’t hesitate to call me for a more detailed analysis and conversation about your situation. If you are planning a move in 2017, now is a great time to begin to plan and maximize your outcome.