With what should come as no surprise to Denverites, their beloved city has been ranked as one of the fastest-growing in the country. A booming metropolis, postcard-perfect scenery, and a plethora of activities to name only a few of Denver’s many attractions, have many keeping a close eye on its real estate market. However, these potential buyers need to act quickly putting in offers–as the popularity of the city grows, so will housing prices this year. This means a nasty reality check for many, especially first time home buyers who will have a difficult time affording a piece of the action, if they wait too long to buy.
Here’s the Skinny
Job growth in 2015 is forecasted to raise 3 percent with about 45,000 new jobs. Patty Silverstein, chief economist for the Metro Denver EDC, states, “As the area continues to attract new companies, draw in talented workers, and promote entrepreneurship, Metro Denver will have better-than-average job growth and a lower unemployment rate than the United States and Colorado.”
This boom in population and limited inventory (only about 4,079 single family and condos available in the residential real estate market) are the main factors for the housing hike. The average price for a residential property in the city was $326,958 last February. About a year later, the number ballooned to $390,067, and this trend is expected to continue. In fact, an 8% growth by the end of the year is predicted, which means that $350,000 dream home you’ve bookmarked will likely end up selling for $385,000.
Anthony Rael, chairman of Denver Metro Association of Realtors warns, “As year-over-year housing prices continue to increase, home affordability is going to become a greater issue as the entry point for first-time buyers grows higher and higher…the continuation of a strong job market in Colorado will hopefully offset the drag from an expected increase in mortgage rates this summer.”
Before new buyers panic, there is a bit of good news: the number of new listings in February increased by 2.7 percent (3,004 in 2014 to 3,087 in 2015). While this may not seem like that significant of a change, and likely will not result in a decrease in prices, it is a reflection of the readiness of sellers to list their homes, and could go a long way towards lessening the hardships of low inventory in the Denver area.
Interest rates are also at a record low. In fact, the U.S. hasn’t seen such numbers since the 1960’s. Economist Elliot Eisenberg told the crowd at the 2015 Colorado Real Estate and Economic Summit that, “It is almost a certainty that the Fed will raise rates this year, albeit slowly.” He said “The first bump could come as early as June”.
So, first time buyers should beware. There is certainly a small window of opportunity to nab a home at a price that won’t burst even a first-time homeowner’s budget this year. Take advantage of the increase in inventory and a spring market. Most smart sellers will list early to avoid the chaos of competition later in the year. By acting fast on a dream home, buyers may even luck out and become a single offer. Stay positive, and keep those dreams of home ownership in Denver alive.