In 2014, homebuyers and sellers in the Denver metro area can expect another strong year for the housing market. There should likely be smaller price gains than last year’s gold rush that happened in the spring.
Steve Bank, managing broker for Fuller Sotheby’s downtown Denver office, says that he perceives “a healthy and more balanced market this year.”
In 2013, the historically low mortgage rates combined with a relatively small inventory of homes for sale resulted in a small housing boom for Denver. Of course, this was hugely beneficial for the sellers, but made it tight for the buyers.
According to the Metrolist, last year in Denver the median home price increased 10 percent and the number of housing transactions closed jumped by over 26 percent.
Due to the increased demand of housing, low amount of housing available, rising prices, and increasing interest rates; buyers were often forced into bidding wars in an attempt to save contracts as much as possible.
According to Gary Bauer, an independent real estate research analyst, last year the metro area of Denver broke previous highs set during the housing boom for the dollar value of deals closed, the number of homes sold, the median home prices, and the average home prices.
It is predicted that there will be fewer homes available for sale to start the year than there were in 2013. However, experts do not expect a repeat of last year for a couple reasons: Higher housing prices and higher interest rates.
With housing prices reaching their previous highs in many areas, we will see more and more sellers entering the market, which should increase the supply of properties available as the year goes along and makes purchase financing an option for some.
While an increase in price can deter some buyers it should also boost their confidence in the market, and help provide reassurance that their home will not lose value soon after they buy it.
One metric experts pay attention to is the number of homes for sale versus the number of homes that sell in one month. This measures the balance of the market, and should provide insight into the strength of the market.
For example a supply of greater than six months of sales is typically considered a buyers’ market. A supply of less than three months would be considered a sellers market.
Denver’s market is considered to be one of the tightest in the country, which is good because it lowers the number of foreclosures and makes for a strong case for purchases rather than foreclosures. The number of Colorado foreclosures fell by over 60% from 2012 to 2013 and should continue to decrease in 2014, although not as drastically as in 2013.
According to Freddie Mac, interest rates are currently at 4.4% and could rise to over 5% as the year goes on. This raise in interest rates will keep the housing market ‘in check’ more so than in 2013’s feeding frenzy.
Although the purchasing of homes in Denver will likely slow down in 2014, we should still see a steady increase because Denver remains one of the most popular locations for young adults looking to relocate.
For additional housing market trends and mortgage updates, stay tuned to DaveKevelighan.com or contact Dave directly at (303) 520-0004.
