We have Brexit quickly approaching, tariffs, countries manipulating their currency… the list of global turbulence goes on an on. This list, though terrible to read and hear about, is great for one thing when it comes to our real estate market: it lowers rates. The Fed’s fear that we are heading towards a slow-down inspired Fed Chair Jerome Powell to drop rates a quarter-point. This is helping our interest rates stay low and they could potentially go lower. We’re seeing rates around the mid-threes (~3.65%) which is amazing, and right now, is the norm.
So how does this relate to our market? Year-over-year, home prices are up 4.27%. So our average home in the Denver metro market (attached $362,922, detached – $551,516) has appreciated between $12-20K conservatively. Our inventory, which reached a new height in June (9,520 active homes), dropped in July (9,359 active homes).
Generally, our market waits until September to decrease in inventory. So what is actually happening? Our prediction of 10,000 homes on the market in August. Well, that just might not happen. What is happening is the usual late summer/early fall surge in sold homes is picking up early, spurred forward by the rates. We are seeing price reductions as sellers are grappling with the fact that the market is no longer appreciating at a double digit clip. There is enough inventory now that, even with the surge, our appreciation is not surging. Yet average prices up 4.27% for the year. So we’re seeing price reductions, but homes are still selling before they hit price points low enough to stop that average price increase.
It is still a sellers market, but after the last 6 years, it sure feels like a buyers market with much more inventory. However, unlike the last 6 years, there is actually inventory available, along with a 3.5-3.99% interest rate out there.
Should these interest rates remain where they are, we are going to see a large dip in inventory over the rest of the year, making 2020 feel very similar to the years past. What can stop that? Our global and local markets. All that said, right now is a phenomenal time to buy or invest in real estate. Yet again, it is a great time to buy your “step up” home if you have lived in your current home for two years. There are enough buyers to help a seller, yet not enough to force them to fight on their new home.
So go out and have a great August, If you need to talk real estate, call us! We are happy to do the deep dive with you!