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Understanding the real estate market can seem daunting, but it doesn’t have to be. We have broken down our most frequently asked questions about the market and the concepts we believe are key to understanding the answers to those questions.

Important Concepts to Know

  1. All markets seek balance over time. In all markets there are cycles. Within these cycles, you can always find a long term trend in the market.
  2. Our market is like a person running up a flight of stairs. Over the last five years, our market has been sprinting up the stairs but, as you would guess, it can’t sprint forever. If you were running up the stairs you would eventually need to start walking up the stairs to get to the top. That is what our market has been doing. It is still going up but at a slower pace. Metaphor aside, this means that prices are still going up but more gradually.

What We Notice in the Market

All things are going up. It is taking longer for properties to sell. Due to this, price reductions are increasing as well. The current market is not biting on prices that are too aggressive. In metro Denver, there are just as many price reductions as new listings on the market. This means that sellers who are too aggressive on day one are having to reduce their prices later as their house sits on the market for longer than expected. Sellers who overprice their homes are often caught chasing the market. This is why it is critical to price your house correctly to begin with.

Average prices are also increasing. They haven’t been increasing as quickly as they used to but they are still increasing steadily. Seller concessions are also increasing as sellers are becoming more flexible with their buyers. They are also more willing to accept contingent offers, especially with higher value homes. Another change in the market is that buyers are becoming pickier. Condition is becoming increasingly more important to buyers when they are looking at homes.

Are Prices Still Going Up?

Our favorite source for price data is the FHFA or the Federal Housing Finance Authority. They track about 250 markets and show the annual appreciation rate per year from actual homes and actual sales. The long term trend for Northern Colorado for the average yearly price appreciation is 5.42%. This shows that price increases are predictable over the long and medium terms. Over the next ten years, we predict that prices will increase by about 5% each year.

What’s up with the Low Rates?

The current interest rate is 3.5%. There are two main reasons why interest rates are currently so low:

  1. Overall worries about the global economy are pushing rates down
  2. Trade wars and trade talks with China are also pushing interest rates down

However, the low-interest rates aren’t expected to last long and will probably increase by about 1% within the next year!

Should I Wait to Buy?

We do not believe that you should wait to buy for two main reasons:

  1. Prices have NEVER come down by a lot
  2. Interest rates will likely be higher if you wait

The good news for buyers is that inventory is going up. Metro Denver has had a 14% increase in inventory and Larimer County has had an 11% increase in inventory. This means more options but the market is not oversupplied.

Where Are All the People Coming From?

Before we get into where everyone is coming from, let’s first talk about just how much Colorado is growing. The state of Colorado grows by about 77,000 people per year. That’s enough people to completely fill Mile High Stadium! They are mainly coming from California, Arizona, Florida, and Texas. Why are they coming? Because people love Colorado! Our market is so healthy over the long term with a strong and diverse economy that drives our real estate market.

The main takeaway is that it is crucial to completely understand the real estate market in your region before buying and selling a house. For up-to-date market trends and the inside scoop about all things Colorado Living, follow us on Facebook!

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