Hello and Happy April!
While we were all a little staggered from typical Colorado March shenanigans like time changes and historic blizzards, our real estate market couldn’t be bothered to slow down even a little bit. Inventory fell again, marking the first time since March of 2014 inventory dropped from February to March, and home prices continued to soar despite a small uptick in interest rates.
The “bubble” question comes up a lot these days given the aggressive appreciation in home values (the average home price is up nearly 7% over the last month), and 2008 seems to still be fresh in the minds of many. But, what we’re dealing with now couldn’t be more different, and there doesn’t appear to be a bubble that will burst.
With 1,921 homes for sale throughout the entire Metro Area (that’s detached and attached combined), interest rates in the 3% range, and home buyers everywhere, supply just can’t keep up with demand. In fact, supply continues to lose ground on demand. How low can the inventory go? Who knows? I don’t think anyone could have or would have predicted we’d get below 2,000 homes for sale. Yet, here we are.
When drawing comparisons to what happened in the housing market in 2008, most forget (or don’t realize) that there were 25,000 homes for sale at that point. In order for our market to feel “normal”, we’d need to see closer to 10,000 homes for sale. “Normal” means one house per buyer, rather than 10 buyers for every house. While that will certainly happen at some point, when is anyone’s guess. It will not be soon. Even if buyer demand were to slow down, perhaps due to interest rates continuing their upward trend, we wouldn’t see home prices decrease. We’d just see the appreciation slow down a touch.
While trying to buy a home right now feels like gluttony for punishment, buyers who are able to stick it out and find a home are rewarded with nearly instant equity gains – the $500,000 home a lucky buyer purchased on March 1st was worth $535,000 when they woke up on April 1st. While that kind of equity growth isn’t sustainable, growth will continue.
As always, if you have questions or are considering participating in this market, do not hesitate to reach out. We love diving into the processes of navigating this market with our clients. Here’s to April showers. See you in May amongst the flowers!