Real Estate New Year
Average Home Price: The average price of a single-family home in metro Denver increased another 9.07 percent in 2016, finishing the year at $442,467. Looks like 2017 will be […]
- Average Home Price: The average price of a single-family home in metro Denver increased another 9.07 percent in 2016, finishing the year at $442,467. Looks like 2017 will be another strong year with an average price increase of 6-8 percent. Here’s why: The number one driver of home price change is the amount of inventory on the market.In 2007 we had a peak of 31,000 properties on the market and prices dropped 14 percent, while in 2016 we averaged just 7,000 properties on the market so prices ROSE more than 9 percent. For the past several years we have had record low inventory in metro Denver with absolutely no sign of it increasing. Until it does there will continue to be tremendous upward pressure on prices as demand outstrips supply. Where will the new supply of home inventory come from? It won’t be bank-owned properties or shortsales – our metro Denver economy is as strong as it’s ever been and a better economy means fewer distressed properties. The additional supply will eventually come from home owners who finally realize what a great market it is and decide to put their home up for sale, and still they’ll need somewhere to move to. A lot of these listings will come from sellers re-shuffling their priorities; downsizing from the big family home once the kids are gone, first-time buyers moving up to larger spaces creating a new crop of first-time buyers and so on. It’s not that the lack of inventory is going to increase our homeless population, it’s that values stay high.Part of the issue is an interesting catch-22 where many potential sellers look at the market and think they can’t find their dream home because of the lack of inventory – therefore they don’t put their homes on the market – thereby contributing to the lack of inventory. I frankly don’t see any reason to think this will change any time soon. Low inventory and rising prices are here to stay for the foreseeable future.
- Number of Homes Sold: The increase in the number of single-family homes sold in 2016 vs. 2015 was a slight 0.47 percent. While prices rose strongly, the number of sales was flat due to the limited inventory. Not expecting a dramatic change in 2017, rather a 3-4 percent increase in home sales. (Our Denver metro population is rising at about 1.5+ percent per year.)
- The Condo & Townhouse Market: For the fourth year in a row the condo and townhouse market did even better than the single-family market. In 2016, this segment saw an average price increase of 12.1 percent, all indications show this will continue. The inventory has been at rock bottom for years and until more attached inventory comes on the market prices will continue to rise. There has been a tremendous boom in new builds, many of them higher-end luxury condos, though it began showing signs of cooling in 2016.
- The Investor Market: Staying strong. Fix and flips will continue to be profitable for those who can find under-priced 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 easy. If you’re looking to invest in the buy-and-hold market, my take is that it will continue to be extremely generous to long-term investors. Vacancy rates are still at record lows and rents continue to skyrocket.
If you’d like more information about the Denver real estate market in general, up-and-coming neighborhoods, or the value of your home specifically, I am always available to answer your call, text or email.