Hard to believe 2014 will be over in three weeks. I hate to use the cliché that the year “flew by” but it really did. What is it that we learned from the 2014 Real Estate market?
Here’s my take on the 2014 real estate market and what’s next:
- I believe when the final numbers come we will surpass last years record for the number of sales of 54,000 plus. No doubt it was good year for everyone involved in the Real Estate Industry.
- I predict we will end the year at about a 6% appreciation for all homes in all price ranges across the metro area. This would beat the street estimate of 3-5%
- Times, they are a changing! If you read my blog last month you know we are headed to a very different, but balanced market in 2015. I predict home values will remain stable and if they do rise it will be a very modest 1-2% gain. It will not be a buyers market in 2015 nor will it be a seller’s market.
- Builders captured a greater market share of the Real Estate business filling in where re-sale inventory fell short. This will continue in 2015, but builders have been begun pricing their product right out of reach of most consumers. Builders have a problem going forward which is how to build and sell a more affordable house while still making a profit.
- The sellers market is officially over! It was a great three-year run from 2012 through 2014. Sellers will need to get realistic about their pricing. They will not get full price or multiple offers those days are gone.
- Some parts of the country will go in reverse in terms of their real estate values. The pricing say for instance in Southern California rose too quickly and the values were un-realistic. As such the product sat on the market and now there is a glut of homes for sale. In a healthy market we will see about 6-9% of homes under water. Some are predicting 15% of homes under water in SoCal by March of next year. That means short sales will be coming back again.
- Home affordability dropped to a new all time low in the US in 2014. This will get better in 2015 as home values remaining constant.
- The Fed continued telegraphing their every move in 2014 telling consumers that they were not going to raise interest rates any time soon. This unfortunately kept buyers on the sideline since they felt no urgency to buy. The good new however is the Fed is finished buying bonds to prop up the real estate market (Quantitate easing is over).
- Lenders were trying to be more flexible in 2014 rolling out additional products to help people buy homes. However every time they gain a little bit of traction the government finds a way to stunt their growth (i.e. the new rules issued by the Consumer Federal Protection Bureau). In 2015 lenders say they will try again to help more qualify for homes loans.
- Rents went through the roof in 2014. In fact they got so bad and so high it was clearly more affordable to buy a home and have a mortgage than to rent a home. If interest rates remain low this trend will continue in 2015 with more people opting to buy than to rent.
- Buying a condo is almost an extinct process. A condo is the most rare commodity in the marketplace. Mostly because condos have not been built by developers in Denver in almost 10 years. The Colorado legislator says they will look to change the law in 2015 that allow HOA’s to sue builders in class action lawsuits for up to 10 YEARS for builder negligence. Lets hope they change the law. It really is unfair to penalize builders for up to 10 years when most states do not do that. 5 years would be far more reasonable and would spur on massive condo development in Denver. That would be good for the economy and everyone involved.
- Next to condos land will be the second hottest commodity. Our team sold more land in 2014 than in the last 8 years. People are not finding what they want on the re-sale market and as such they are opting to build exactly what they want even if it costs them more. Finding a good infill lot or a one off lot in Denver will be like finding a needle in a haystack. Out in the suburbs look for people to gobble up land with great views and space between their neighbors.
When the final numbers come out in late January will see how this year in review held up. On a personal note the Colorado Dream House Team had their best year ever helping more people buy and sell a home than we could possibly imagine. If we can help you in some way we would love to hear from you at firstname.lastname@example.org or 720-446-6325