Opportunities Among Economic Uncertainty | Guest Post
I want to channel my inner-Mr. Rogers and share my word of the day: uncertainty.
Uncertainty categorizes the nation’s overall economic climate – with a looming recession, trade wars and yield curve inversion. What does it mean for REALTORS® and their clients in Denver’s housing market? Global growth and business confidence are down while consumer spending remains up. Low interest rates and rising family income are improving affordability and offsetting the effects of the continued lack of housing inventory.
Mortgage purchase applications are up five percent year over year as buyer demand remains strong. So why are the month-over-month and year-over-year sold homes down? Buyers are becoming more discerning and sense the approaching market shift to be in their favor. Our active inventory is just over half of our August average (9,350 current compared to the average 16,761 active listings), and buyers understand the market implications when they see an abundant inventory, given its comparison over the last six years. Buyers are no longer convinced we are in a seller’s market, which – it is – with 1.81 months of inventory. They simply want what they want. Several title companies are saying as much as 33 percent of contracts are falling out due largely in part to inspections, which should not be a surprise to those of you with boots on the ground. Buyers are in a buyer’s market and sellers are in a seller’s market, and we need to have our expectations accordingly.
Here’s what I know. Interest rates are at three-year lows hovering around 3.6 percent (with 0.5 percent discount); appreciation year over year is 4.17 percent, and inventory is up 13.64 percent. To be clear, I love this market. Buyers have more choices and can afford more than they have in years, which is perfect timing as millennials are entering the market in increasing numbers and over half of Gen Z plans on buying their first home before the age of 30. Sellers will still get top dollar for their home if priced right and staged well. This means they can turn around and move up with rates low.
Another phenomenon we are seeing is more buyers are taking advantage of increasing rents and the opportunities real estate offers for building long term wealth and converting their primary homes to rentals. Now, I get it, this does not bode well for our lack of inventory but does a little something for me. As you know, I am a huge proponent of building wealth through real estate. And when I can see continued appreciation, increasing rents and increased cash flow due to lower interest rates... well, you can see why I’m excited!
If you want to secure your financial future through real estate or simply want to buy your first home; you need to give me a call because this is what our team does best!
The Rueth Team of Fairway Independent Mortgage Corporation
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.
If you are interested in submitting a guest post, please contact Sarah at.