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New Year. New Opportunity!

What opportunities will you have to buy or sell a home this year? Don’t think you’ll have one? Think again!

Let’s start by looking waayyy back to December 2023, and then we’ll look forward.  Aside from the seasonal slowdown, higher interest rates and low inventory, have had the most impact on the market.  You can dive deeper by clicking the full Denver Real Estate Market Trends  report, and know I’m always here for you with home values and neighborhood trends catered to your specific needs. Now, back to the future.

In my experience…

Winter is the best time to buy a home. Fewer buyers are willing to face the cold, postponing their shopping for early spring, giving you an opportunity to make an offer with less (or no) competition. And sellers who sell in the winter generally have good reason to. This means their motivation is driven by their needs rather than their wants. Another opportunity!

Waiting for the rates to fall?  Don’t. While nobody knows for sure what will happen in 2024, we are anticipating multiple rate drops as the economy stabilizes, but the “waiters” often lose. Think about it. If you buy early, you’ll be gaining equity as prices rise with demand. Buyers who wait to time the market will face a different set of challenges. Lower rates bring more buyers, bidding wars and higher prices which increase the gains for those willing to buy now and refinance once all that rate dropping happens.  Today’s rates from my lending partner, Select Lending Services, look a lot better overall than where we were last year.

 

 

Let’s talk about how 2024 can open a real estate opportunity for you!

“With the holidays upon us, we are focusing on the gift of homeownership this season. Owning a home provides stability and security for many families. It is also the single largest investment most people make in their lifetime, which serves as the single best vehicle to attain individual and generational wealth. Speaking of gifts, this is my absolute favorite time for buyers to get out and shop for homes. Sellers whose properties are on the market typically need to sell and are more willing to negotiate than in March or April when the market is at its peak. Additionally, the competition from other buyers drops considerably. As such, buyers who can see the beauty of buying a home right now have their choice of home and can negotiate their way into their dream home.
Additionally, interest rates are starting a downward trend, and we as REALTORS® know that if rates continue to drop then demand will increase. In fact, many agents saw a flurry of activity last month when rates dropped buying end-of-year activity. Depend­ing on where rates trend, we may see bidding wars back before we know it.”
Libby Levinson-Katz
Chair of the DMAR Market Trends Committee | Denver REALTOR®
  • LUXURY MARKET ($1,000,000+): “Zig Ziglar once said, “Every sale has five obstacles: no need, no money, no hurry, no desire, no trust.” Today, all five of those obstacles present themselves clearly to home buyers and sellers in the $1 million and over price segment. Despite it all, 2023 has proven to be quite a strong year for this segment. Removing the pandemic years and comparing to 2019, sales volume year-to-date has more than doubled, closed volume has nearly doubled, new listings are up over 66%, and price per square foot is up over 14%. I predict this segment will continue to see growth as more people spend more money to experience the gift of living in Colorado.” Susan Thayer, DMAR Market Trends Committee Member & Denver REALTOR®.
  • SIGNATURE MARKET ($750,000 – $999,999): “Black Friday may only last one day in November, but for buyers in the $750,000 to $999,999 price range, the deals lasted all month. The deceleration in the market, however, should not cause any alarm. It is seasonal and expected. Historically, the holidays in November and December take precedence over home buying and selling goals, so we typically experience a decline in market activity. November and December showcase prime opportunities for serious buyers: far less competition, declining prices, expected seller concessions, and recently, declining interest rates. It’s the perfect time for them to give themselves the gift of home ownership.” Colleen Covell, DMAR Market Trends Committee Member & Denver REALTOR®.
  • PREMIER MARKET ($500,000 – $749,999) “There are few things greater than the gift of homeownership. A home can offer financial security, stability, tax benefits, and community. It also serves as the backdrop for so many wonderful moments in life, especially during the holiday season. Many buyers are inclined to hit the proverbial pause button on the home search and wait until spring. While that is an option, waiting to buy a new home likely means competition and concessions on the buyer side. Meanwhile, we have great homes on the market now with motivated sellers and less competition. Perhaps you can negotiate concessions on inspection, or maybe that low interest loan is assumable and can be transfered to the buyer. As REALTORS®, our gift is the ability to guide our clients with knowledge and savviness. End of the year is a busy time as I encourage buyers to look when no one else is. We find great homes and they pay less than if they had waited.” Nick DiPasquale, DMAR Market Trends Committee Member, and Denver REALTOR®.
*Remarks from Pages 15-16 of the December 2023 Market Trends Report from DMAR

 

The numbers are in and it’s been a wild ride! The year started with an insane first quarter, with buyers offering more than $100k over asking price, waiving inspections, covering appraisal gaps. And then, interest rates went up, showings dropped off, prices came down, and the market got… quiet.

It is common for the Denver real estate market to expect a seasonal slow down after July 4th, but this year’s cooling happened early. With the rise in inflation, the Feds pushed hard on rates and buyers pulled back. Many were exhausted by the Q1 rush, some felt the effects of the stock market, while others feared the increased interest rates. When rates rise 1 point, that’s a 10% reduction in buying power.  A reduction in the loan amount often moves a buyer into a lower, more competitive, price point. Home prices have adjusted to these changes, leveling off a bit and shifting toward more balance, between home buyers and sellers.

“Every indicator points to the market shifting closer to a buyer’s market. The month-end active listing increased 21.53 percent last month, pending and closed deals decreased and days in the MLS increased by 30 percent. We are still a long way from what many experts would consider a buyer’s market.” -Andrew Abrams, DMAR Trends Committee Chair

With the number of residential homes on the rise, buyers have more options, but sellers see themselves with more competition than they did earlier in the year. The average close price saw a minor dip from the prior month but year over year, there was a 11.04% increase. As for days on market, there was both an increase from last month and from the same time in 2021.

With all the changes in the economy, we are not surprised to see movement in the real estate market too. However, don’t let the numbers keep you from your end goal. Whether that’s buying, selling, or investing one thing I know is that its your life that moves you, not the market. NOW is always the right time if it fits your personal situation.

Looking for more explanation on all of this? Comment, call/text/email and let’s have a conversation. Or if you’re shy like me, check out the Market Report for Q2 . If you want to see where we are today, click on the Denver Metro Association of Realtors Market Trends Report for August.

 

 

“I honestly believe that without Tracy, we would not be living in our dream house today. Tracy’s knowledge, intuition, skill and personality put her at the top. She really cares about people and fairness to both sides. She negotiated a win-win situation where both parties came away happy.” -Jeanne Ellis

 

 

 

 

 

 

“Tracy is the best!! She sold our 1 bedroom condo in a Historic Register building in Capitol Hill in Denver. Unlike many realtors who are just looking to make a sale and move on to the next, Tracy really cares about her clients and their financial situation. She actually convinced us not to sell the first time we contacted her because the market was in the pits and our condo was worth less than 1/2 what we paid for it. By following her advice and waiting a few years, we ended up making money on the condo when it sold for OVER the asking price. She was incredibly patient with all of our concerns and questions, and knows more about the market than anyone. Also worth mentioning that we were out of state for the whole process, so she handled EVERYTHING; renovations, cleaning, staging, pricing, showing, you name it! She made this very stressful situation much less so, and we can’t imagine using anyone else.” – Keith Orell

“I cannot recommend Tracy highly enough!! I had just moved to Denver and Tracy worked so hard to find a house for me, guide me through the buying process and negotiate on my behalf with the sellers. Tracy is professional, tireless and super conscientious. She never forgets the smallest detail. She also has a great sense of humour! I would not hesitate to recommend Tracy….5+ stars all around!!” – Bonnie King

2Q16 Showing Traffic - TShaffer [4151395]-page-001 (1)

Wonder why your home didn’t sell in a weekend? Here’s a bit of info on the summer real estate market. If you take a look at the graph you’ll see that showing traffic in 2Q 2016 is down quite a bit from the First Quarter of the year. This is no surprise, it’s been the seasonal trend for the last four years. Coming off of a super-heated real estate market this spring, the usual summer “slowdown” feels more dramatic than a political convention. If you’re “lingering” on the market for a whopping two weeks remember that listings don’t always sell in a weekend and not all of them get twenty offers, especially those priced over $350,000. Summer in Denver is not only the real estate selling season, it’s vacation time too! With so much to do in our lovely state, we get up, get out and go more often and our stressed out home buyers need a break. Showings tend to pick up again after the Fourth of July for those looking to make a move and settle in before school starts in late August. That’s the conventional wisdom coming from an unconventional gal.
What I have seen year-after-year is a strong autumn season for real estate sales when the summer buyers have either completed or delayed their purchase and those who want to serve Thanksgiving in a new home come out to play. Same goes for the end of the year when myth tells us it’s a bad time to list a house for sale. My experience has been that winter buyers are fewer, yes, but they are more serious and with our continued lack of inventory many will see the cooler months as a less competitive time to purchase a home. Look for more soon in my next Real Estate Market Update.

Let’s talk about homeownership. Are you considering buying vs. renting?

May 16 - Market Snapshot2
Renters often ask me if it’s too late to buy a house: Are we heading for a big downturn? Are we too deep in the market cycle to buy? they wonder. Timing the real estate market perfectly is extremely difficult, perhaps impossible, and some of these potential buyers were the same renters that were sitting on the fence when the market was down, even once we’d passed the nadir. I believe that buying a home is less about the market and more about life; your life. So don’t try to time the market, take a look at your life, the low interest rates and time that!

1.) Are you getting married, starting a family, or tired of paying skyrocketing rent without having an asset to show for it? Would you like to have more space; a backyard for the dog, the kids, the BBQs, or the tomatoes? Do you like the idea of being part of a neighborhood, community? Perhaps you got a nice raise, job or promotion and you’d like to set down roots, do you plan on staying in one place for at least five years? Do you like the idea of investing in something that will build long-term wealth?

These are the types of questions you should be asking when you are considering homeownership.

Here’s another thing to keep in mind. In the U.S., the average total net worth of rental households is $5,800. Compare that with the average net worth of a home-owning household at $199,500 and you’ve got worth 34 times more than those who rent! There’s no doubt that over the long term, homeownership is a solid way to build wealth and financial security. I often advise my first-time buyers to get into something affordable now (not so easy in Denver these days, but doable) and then move up when life allows. If you can keep that first property as a rental, it’s a great way to invest in your financial future.

2. Interest rates remain at record lows but this can’t last forever. No one knows when they’re going to rise, but news this week gave hints of a rise as early as June. Though home prices have gone up the past several years, low interest rates continue to make homes relatively affordable— especially compared to renting. Once interest rates rise, the door to home affordability will begin to close for a lot of potential buyers, leaving them sorry they didn’t act when interest rates were at 50-year lows.

Let me break down the numbers. Assume you are purchasing a $210,000 condo with a 5 percent down payment. The Principle + Interest payment at 4% interest would be $952 per month (tax and insurance and HOA not included). An interest rate increase of one percent (5%) would take your payment of $1,070 per month—an increase of $1,416 a year. Now assume that rates tick up to 6 percent. That increase would result in a 21 percent increase in payments from $952 to $1,196. Where you really see the effect of these increases is when you hold the property for the full 30 years. On a $210,000, 30-year fixed-rate mortgage that increases from 4 to 5 percent, the borrower who obtains the 5 percent loan would pay an additional $42,772 in extra interest as opposed to the borrower who paid just 4 percent interest. Though most buyers consider their monthly payment as most important, when you look at the life of the loan you’re paying a lot more in the total loan amount. This is a great reason to make a “move-up” move right now. Say you’ve outgrown your place, it may be time to cash out and get your “forever home”, or like I mentioned, use your current home as an income property and let your renters pay off your mortgage.
The main reason the average home owner has so much more personal wealth than the average renter is that homes appreciate in value. Over the past 45 years, homes in metro Denver appreciated 6.3 percent per year. If you buy a $200,000 home, you can expect over the long term its value to rise about 6 percent every year. This means you’d make $12,000 in appreciation the first year, an additional $12,720 the second year, another $13,483 in the third year, and on and on. Contrary to popular belief, only 4 of the past 45 years did prices actually fall in metro Denver.
If you’re still wondering whether you’d be better off renting or buying, Trulia built a great Rent-vs-Buy tool. Answer a few simple questions and the system tells you whether it makes more financial sense over the next seven years to rent or purchase. I think it’s worth a couple minutes of your time to see what you can learn – you’ll really like it! buyers chart
Key Messages for May

Prices are up 8% in the prior 12 months vs historical 6%. Inventories are tighter than last year, especially for small, lower priced homes. In 2016, we expect 8-9% appreciation, flat unit sales volume increases, and continued tight inventories.