Housing Market in Denver - What's Happening? Part 1
What's Happening in the Denver Housing Market?
Make no mistake, the state of the economy is what many people are thinking about. Globally, according to The Wall Street Journal, three-quarters of CEOs feel that we are in a recession or will be in the next 12-18 months. This can definitely affect the real estate market, and we are seeing the market shift here in Denver as we speak.
Homes aren't flying off of the shelf anymore, we aren’t seeing bidding wars. As interest rates continue to fluctuate, we see that buyers have less buying power and are unsure of what to do. Let’s look at what the real estate experts and advisors have to say.
Consider how the mortgage rates have behaved over the last 40 years during times of recession (see graph below). While there is no way to know how the market will perform and what will happen, it’s still good to reflect on how past recessions have historically affected the real estate market. Over the last 40 years, you can see that mortgage rates have actually fallen during times of recession, an average of 1.8 percentage points from peak over the last 5 recessions.
What Does History Say About Home Prices and Recession?
History also tells us that recessions do not automatically mean we are going to see a housing crisis. See graph below. What's interesting to note is that even though the 2008 housing crash showed an overall decline of nearly 20% of home prices, here in Denver we recovered fully in less than 2 years. When you consider that PLUS the fact that the past few years have seen double-digit appreciation, you may worry less about short-term and focus on long-term. That's pretty solid advice, regardless if it's the real estate market or any other investment. We continue to need housing - whether that is renting an apartment, purchasing a house or living with a friend. Most of today's millionaires have created their wealth through purchasing real estate. Purchasing a home can be a great hedge against inflation since you lock in your payment amount and build wealth through equity whereas rental rates typically rise each year.
So as you consider your next real estate move, note that recession does not mean 2008 and falling prices.
Here for you.
We are here help guide you through a great real estate experience! Reach out to me to find out what the buying or selling process would look like for your specific situation. We have multiple solutions for selling your home (check out our recent article about Buy Before Selling) and plenty of creative strategies for getting you the best deal when purchasing (here's an update about Buying in Denver). I would love to hear more about your circumstance and happy help guide you! You might also want to read our next blog to know if Your Window to Buy a Home in SE Denver Metro is Finally Opening.
Curious about how your home's value has changed?
We will gladly prepare a Comparative Market Analysis for you so that you are armed with the most current information.