If you have been following the real estate trends and news this year, you would know that the real estate market is about to change again. I watch this stuff closely not just because it’s my job, but because it’s interesting to know how it all intertwines with our national economy. Moreover, I use the information for the articles we write as well as for the TV segments that we do on FOX. I like to try to stay ahead of the curve when predicting the trend so I can give our clients really sound advice. I am ready to proclaim that THE SELLER’S MARKET IS OFFICALLY OVER. Gone are the days of multiple offers, homes selling in a few hours at over the asking price. Get ready for business being back to normal. The average $350,000 home in Highlands Ranch will take 60-90 days to sell once again. There may be one or two price drops during that time and it won’t sell for full price. Sellers will need to go back to pricing their home competitively, making sure that the home shows great and hire Realtors with exceptional marketing.
It was a good three-year run from 2012 through 2014 and it was more than some parts of the country will ever experience, but the seller’s market is officially over. We started telling our clients back in February that 2014 would be the peak of home values and it’s played out exactly that way. We believe that based on two strong economic factors:
- The rate of new home builds was ramping up faster than expected and as such, home builders would soon pump more and more inventory into the marketplace, giving buyers more choices. This would level out prices and builders would begin to take a larger market share.
- It was not realistic to think that Denver could sustain a 10% annual growth year after year. We believe that the market would not pass a 6% gain in appreciation this year and it looks like that is what it’s going to shape up to be.
In addition to these two strong indicators, the Fed has told the American people that they will not increase the interest rates in the near term. That has left buyers with a lack of urgency. Buyers have a false sense of security right now that the 4% interest rates has become the norm and will be here forever. More importantly, people’s income has not risen along with home values, and as such, home affordability has decreased. In some areas, we have priced buyers out of the market. Builders can no longer even build a single family home in Denver for less than $350,000. Construction costs have risen so quickly that builders are forced to re-think how they are going to make a profit. They did their projections for profitability years ago when they bought the land, but today’s costs are vastly different and they couldn’t pass on the cost to the consumers forever.
Does all of this mean that you can’t sell your home or there are no more buyers? NO! It just means that it’s a shifting market and you need to be prepared on how to handle it. Remember, there are opportunities in every market type.