Selling without a sign – The current state of the Residential Market in Denver

I received a phone call from a broker I know on Monday, asking about our property at 45th and Clay. It was not marketed, it had no sign and none of the contractors knew who owned the property. He pulled public records, found it was us and we had it under contract the next day.
That is indicative of this furiously hot market we are currently facing in Denver. It’s all a factor of Supply in the Metro area, with inventory levels hovering around all-time lows. Demand is still rather week when compared to years past, but due to supply, it has created an imbalance because no one is selling. After half a decade of home prices declining or flat, sellers who have held out this long, feel like prices are climbing, so why sell now. Everyone who had to sell for financial or hardship reasons have already done so, leaving only those who have situational circumstances selling their homes. With the supply this low it is also creating a rather dramatic spike in housing pricing with buyers competing for just a few quality properties.
I can see this trend continuing for another 6-12 months and then slowly cooling to a more normal market with neither buyer or sellers in charge as the real test to the housing market will rear it’s ugly head, interest rates. If history is any indicator, housing pricing will stay relatively flat over the next 5-10 years as these historically low interest rates return to a more normal balance. Inflation will cause incomes to rise, but only enough to compensate for the rising interest rates charged on mortgages. This in turn leaves home prices roughly flat as buyers’ payments are already increasing and their overall expenditures continue to rise even though pricing remains the same. Historically, home inflation only occurs in times of decreasing or flat interest rates after long periods of rising rates. So getting back to those “good old days” just might take a little longer than many hoped.

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