What Does This Quarter’s Data Tell Us About The Denver Real Estate Market 2017?
Welcome to the Denver real estate market 2017 mid-year report! Here’s our quick overview of this quarter’s market trends and a look at how it may impact future residential sales statistics.
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- Inventory (Denver Real Estate Market 2017): 2017 is likely to continue to play out very strongly because the number one driver of home price change is the amount of inventory on the market. Our market inventory continues to be near record lows, with only 7,081 single family homes on the market as of June 30 (16,000 – 18,000 is considered a balanced market). However, there is at least a glimmer of hope for buyers because this is 4.1 percent more inventory than there was a year ago. Are sellers starting to put more property on the market for sale? Will this begin to satisfy the overwhelming demand we’ve seen from buyers the past several years? Will the market begin to move to greater balance between buyers and sellers? Only time will tell and it’s still WAY too early to predict. What is certain is that until more inventory returns to the market there will continue to be tremendous upward pressure on prices as demand continues to outstrip supply. And where will the new supply of home inventory come from? It won’t be bank-owned properties or shortsales. Denver currently has the lowest percentage of distressed (bank-owned and shortsale) properties among the largest 25 cities in the U.S. The metro Denver economy is strong and unemployment is at a record low so there will be very few distressed properties coming onto the market for the foreseeable future. The additional supply will eventually come from homeowners who finally realize what a great seller’s market they have waiting at their fingertips. When this will happen in earnest is anyone’s guess. We’ve seen very little evidence of homeowners making this realization so far, despite the slight uptick in June’s inventory. Sooner or later, additional inventory is bound to appear: that’s your sign of a changing market. However, this inventory increase might take several more years – expect prices to continue their strong rise in the meantime.
- Average Home Price: The average price of a single-family home in metro Denver went up another 6.8 percent in the past 12 months, hitting $454,771. This is a lower price increase than the previous 3 years but still a strong move forward.
- Number of Homes Sold: Because there is so little inventory in our market the number of single-family homes sold is actually going DOWN year over year, not up. There were 1.3 percent fewer homes sold in June 2017 than June 2016 simply because inventory remains so sparse. Amazing.
- The Investor Market: Denver is still an intelligent choice for real estate investment. The fix and flip market is strong for those who can find underpriced homes to buy and repair. They’re out there but it takes tools, patience, and work to find them. Once you get one fixed up, selling is the easy part (thanks to the lack of competing inventory). The buy-and-hold market will continue to be extremely profitable for long-term investors. Interest rates and vacancy rates are still near record lows and rents continue to increase – an astronomical 40 percent the past 4 years! It’s not difficult to buy a rental property in today’s environment and put it on the path to be paid off in 12-15 years. Just think how your life would change if you owned a couple of rental properties free and clear! For building long-term wealth it’s tough to compete with rental property ownership. That’s the one thing that will never change.