Today’s Denver real estate market is very good — just not quite as good as the last five years.
We are experiencing a balanced and healthy market while moving away from the seller’s market of last summer. For the most part, sellers are unable to dictate their home value beyond what the market will allow (what buyers will pay).
Because of the internet, good broker counsel and taking the time to physically shop for homes, buyers are better educated and are making better-informed decisions. Available homes for sale are up 6-7% over this time last year but may take slightly longer to sell, helping buyers shop with less anxiety. This past spring, during the strong selling season, nearly 50% of all new listings went under contract within eight days.
Before you say “WHAT?” let me qualify that more. The high majority of those are in Denver’s average price range ($500s) and less, where there are many buyers, making for a more competitive market.
When you see the term “average days on market” (DOM), the number you read is accurate but a bit deceiving. Although half the new listings may sell in about a week, most price ranges above the $500s can take weeks and average months in the upper price ranges. It is helpful to qualify and localize your focus when talking about average price ($500,000), DOM (32 days) or even percentage of list to sale price (98.8%) (May statistics from REColorado.com).
Looking at the last category of “list price to sold price,” it will vary significantly by price range and will be better qualified by determining if the percentage is from the original price or the current list price (after any price reductions), compared to the selling price.
The luxury market, considered to be over $1 million, is only about 5% of all sales (about 2,100 sales in 2018). To demonstrate specific market differences, as reported by LIV Sotheby’s International Realty, the YTD figures for the Denver metro area (all price ranges) rose 4% in total volume and had a 2% rise in the number of properties sold. The luxury market revealed a 15% increase in total sales volume and an 11% increase in the number of properties sold. Prices in metro Denver (all price ranges) are projected to increase 5.5%-7% in 2019, while the luxury home market will likely see values increase 2%-3%, still above the current 1.9% inflation rate.
Sellers should be aware of their market while being realistic and sensitive to sales around their neighborhoods by learning how long it takes for homes to sell, and what is the local absorption rate of homes being sold.
As the U.S. homeownership rate is gradually rising, renters (who would prefer to own) may still see it as a challenge to purchase as they have concerns about saving for a down payment of 10%-20%. Also, they may be concerned about their credit score, they may feel stressed with student loans or other consumer debt, or perhaps just getting started feels overwhelming.
With interest rates softening to the 4% level, roll up your sleeves and realize it’s possible to overcome all the above concerns. The factor on a 30-year 4% mortgage is $4.77 per 1,000, meaning that principal and interest payment on a $400,000 loan is $1,908/mo. (400X4.77); add in taxes and insurance totaling $350-$500/mo. and you might be spending the same amount or less, not including tax advantages, monthly loan reduction and more.
There are many loan opportunities with only 3%-5% down. There are good ways to consolidate debt and increase credit scores. Start by sitting down with an experienced, mortgage loan person and formulate your action plan. Remember a goal without a plan … is only a wish.
Property taxes are conceived by blending state with county and city districts. I work with buyers from locations across the country, and they are pleasantly surprised at how low taxes are compared to where they came from. The property tax rate across the U.S. averages 1.2% of assessed value as reported by USA Today. Colorado’s rate is at 0.6%, one of the lowest nationwide. Add to that our weather, good economy, recreational opportunities, cultural and entertainment venues and major sports attractions … we are pretty darn lucky.
LIV Sotheby’s International Realty, the exclusive Board of Regent for the Who’s Who in Luxury Real Estate, has 23 office locations in metro Denver and surrounding areas, including Boulder, Castle Rock, Cherry Creek, Denver Tech Center, downtown Denver, Evergreen and the resort communities of Breckenridge, Crested Butte, Telluride and the Vail Valley. For more information, call 303-893-3200. To service all of your real estate needs, visit LIVSothebysRealty.com.
The news and editorial staffs of The Denver Post had no role in this post’s preparation.