Although we have all rode the stock market roller coaster as of late, we don't believe the sky is falling and the world will soon come to an end. We believe that the markets are exhibiting fear-based, short-term reactions to what may or may not happen in the European sovereign debt challenges and softer-than-hoped economic data in the U.S. In light of the recent economic turmoil, please remember the following:
- Corporate profits still remain strong.
- Historically speaking, we are still in a low inflation environment (at least for the time being).
- Interest rates are still low – the 10 year treasury is near 2%.
- U.S. banks appear to be far better capitalized today than in 2008.
- It seems we have an extremely accommodative FED.
We always do our best to keep our fingers on the pulse of the Denver real estate market as it relates to the greater U.S. market. The consensus among our agents and most local real estate professionals right now is that the market is very balanced, with little advantage to buyers or sellers. Since we only work with a subset of buyers and sellers in the greater market on a day-to-day basis, it is always important to analyze the local market data to see if our perception is in line with current market activity.
One major statistic that stands out and supports our position is the active inventory of available properties which remains 25% lower than last year. Basic supply and demand suggest that prices will remain stable as buyers are often faced with paying market value to get what they want in a home. They simply have 25% fewer homes and condos to choose from with nearly 4,400 fewer properties on the market compared to last year. Activity also suggests that lower inventories will continue as under contract properties have increased 12% from last year. Further, 18% more homes and condos sold in July 2011 than July 2010. With inventory levels remaining low and activity strong overall, it is no wonder that pricing remains stable year-over-year.
Denver is one of the few markets where pricing remains level over the last 12 months with the average property neither gaining nor losing value. Buyer activity is driven in part by historically low interest rates (we have clients locking 30 year loans under the 4% mark!) and an unemployment rate in Colorado that had dropped two consecutive months to a current 8.6% rate which is lower than many other states. Foreclosure filings in the greater Denver area are also down 30% compared to the same time last year which bolsters the real estate market as well.
Given these statistics for the balance/strength of the Denver real estate market, why is it advantageous for buyers you might ask? A balanced and stable market gives buyers the assurance that their investment is likely to be an appreciating asset. There has been more wealth created in the United States through real estate investments than through any other form of commerce. Investors across the nation are becoming increasingly interested in the Denver market as it is a stable market where real estate values have faired well throughout the "recession." As investor dollars flow into the Denver real estate market, especially as the savvy ones continue to snap up rental properties, it is further confirmation that now may be the time to get off the fence as a buyer. You can purchase a home while it is still affordable and at an interest rate rarely seen in a lifetime. At the end of the day, buying real estate is still better than renting real estate in 74% of U.S. cities, according to Inman News.
As always, we are up-to-date on the latest market happenings. Please don't hesitate to contact us whenever you or someone you know is considering buying or selling a home, condo or loft in Denver!