May 2019 DMAR Market Trends Insight | Guest Post
Talk to two different REALTORS® and you will hear two different opinions on how the market is doing. So what’s really going on?
We all know that real estate is hyperlocal, but market trends reinforce this observation now more than ever. Talk to two different REALTORS® and you will hear two different opinions on how the market is doing. Some think it’s hotter than last year, while others are finding their clients feel trapped in homes with tons of equity, but they are afraid the move will cost them too much.
So what’s really going on?
Gross Domestic Product (GDP) is up 3.2% in Q1, this was the best performance in four years. Even still, expectations call for an annualized 2.2%, so let’s just call this moderate growth.
Inflation remains low as the Personal Consumption Index (PCI), the Federal Reserve’s preferred measure of inflation, increased from 1.3 to 1.5% in March below their target of 2%.
The Federal Reserve is in a sweet spot right now, with moderate growth and low inflation. Despite President Trump’s pressure to lower rates and provide quantitative easing, the Federal Reserve is implementing a patient strategy of keeping rates steady.
Mortgage rates have settled into the low fours with the national average quoted by Freddie Mac as 4.25% with a .5% origination. The Mortgage Bankers Association (MBA) predicts this to move to 4.4% by year end; well below our 5% last November.
The ADP Employment Report came out much higher than the expected 180k jobs created last month, instead showing 275k jobs created. Even though one may question how we could be so far off on our expectations, there’s certainly cause to revel in the continued expansion as this is the highest number in nine months.
As a localized side note, Colorado created 6,100 jobs in March. Colorado Springs now ranks fourth in the country for job growth and is trailed by Fort Collins ranked at ninth.
National wage growth is also up 3% year-over-year; Colorado is up 1.5%. For the first time in seven years, wage growth is accelerating at the same rate as home prices.
Locally, we are seeing this strong purchase-market grow legs. Active listings are up to 7,012, which is a 35.89% increase year-to-date; 21.26% since March. Remember, the last four years active listings were in the low 5,000s this time of year. Buyers are coming out strong too, with under-contract listings up 18.76% since March.
One thing to note in favor of buyers is the observation that the average seller received 100% of their asking price between 2015 and 2018. Today that number is down to 99.24%. Seller concessions are also up 58% at the end of the first quarter.
Another trend seen is in higher-end homes. Just a few months ago we had more than seven months of inventory above $1M for single families and $750k for condos. Today we only have 4.41 for single families and 3.24 for condos above $1 million. In fact, this is a seller’s market for all price points landing at 1.5 months of inventory for both single families and condos. Keep watching those upper-end markets. Month-over-month we saw an increase of 32.20% sold over $1M; 5.28% $750K - 999K; 9.77% $500K - 749k; and only .61% $300 - 499k.
What’s the bottom line? This is a healthy market. The central banks are moderating potential risks of a recession. More inventory is coming online, more buyers are going under contract, home sales are moving quickly when priced right, decent opportunities for negotiating still exist and listing prices show moderate increasing. Take into account all these factors, and there is nowhere I would rather be than Denver’s real estate market.
If you want to stay ahead of the changes and continue building wealth in real estate, give me a call. This is exactly where our team excels!
Nicole Rueth, Fairway Independent Mortgage Corporation As an owner of 23 investment properties and educator of multiple popular investment workshops, Nicole Rueth and her team at Fairway Mortgage is a trusted, knowledgeable resource available to help REALTORS® facilitate lucrative relationships with clients interested in building wealth through real estate. Get in touch with us to see how you can encourage clients as they get started securing their financial future.
The views, opinions and positions expressed within this guest post are those of the author alone and do not necessarily represent those of the Denver Metro Association of REALTORS®. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.
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