Nov. 11, 2014
Every bit of residential real estate market data we have at hand indicates a continuing strong sellers’ market. Recent sales activity in Metro Denver exceeds last year, Foot traffic through homes for sale is the highest in a decade, mortgage credit availability has been increasing, and mortgage loan approvals are happening with a continuing decline in credit scores.
So, the issue is not available buyers, because they are out there, especially in the price ranges below $500,000. The issue, and the challenge for buyers, is finding something to buy. Think of it this way. Imagine the Metro Denver home market as a TARGET® store. The store is full of buyers, there are more waiting outside to get in, and more cars keep pulling into the parking lot. All of the customers have some money to buy things, some folks more than others, but they are all ready, willing and able to buy. But, the shelves are half full. Any popular item, such as this years popular Christmas toy, disappears from the shelf as fast as the stock clerks place it on the shelf, and there is a fight among some customers for the best things. Some customers are sneaking in the back, trying to get items before they are placed on the shelf, and high-handed back room deals are not uncommon. The manufacturers (the builders in the real estate world) are trying their best to get product to the store, but they have their own problems with material cost and availability, labor shortages, and onerous regulatory difficulties. Any desirable product that is available is being sold at prices that were higher than yesterday, or last month, or last year.
Of course, there are a few things that sit on the shelves longer than others. Things with unusual colors, or bad packaging, and certainly products that are priced beyond what makes sense to a prudent buyer, those things sell slow, but even those things sell eventually, perhaps with a markdown in price, or repackaging.
Is the real estate market really like a variety store? Well, yes, in many ways, it is. More choices, and mortgage lending complicates the process somewhat, but its important to remember that when we speak of a real estate market, we really mean “MARKET”.
So, if you are a home owner today in Metro Denver, you have an advantage. The Denver market has 3.3 months less available inventory than the National average. Most owners have recovered from the low price index of January 2009, and, as we go into 2015, many home owners will have useable equity. The peak of this extraordinary market may very well occur in the early summer of 2015, as builders increase inventory and interest rates begin to rise as predicted by the experts. Remember our variety store? As more product is placed on the shelf, sales slowdown, because the demand has been met. Rising interest rates slow the amount of cash available to buyers, so sales fall off. That does not mean a drop, just less of a rise.
If you are thinking of selling in 2015, now is the time to start preparing. Consider those little things that need repaired, splash a new color in the family room, make sure the mechanical items in your home are serviced and in good working order. If repairs are needed, string them out over 4 or 5 months, both for less hassle, and ease on your bank account.
Call!! As your real estate advisor, I can spend time with you now, giving you advise on what to do and not to do in preparing your house for sale, and we can work together to monitor the market. Like everything else on the planet, selling your home has become more complex, time consuming, and stressful. Anything we can do in advance will lessen the stress. Please give me a call as we approach the holiday season, and we can meet to discuss your situation and update you on your local market.