Is Colorado Home Inventory Ever Going to Ever Pick Up in 2021? Good News – It Already Is
It has been a rough year for buyers buying homes in Colorado. Inventory has been lower than it ever has been. Areas like the Denver Foothills have had low inventory and sky rocketing home values for a year now. Things are already looking better for buyers in Colorado and the Denver Foothills to be specific. They are still pretty low but the trend is improving for buyers.
What is a good inventory level?
For most of 2016, the Colorado real estate industry was in a holding pattern. Sales and prices were sluggish with buyers starting to feel the effects of the lower oil prices. Sales fell and prices rose and people began to think that the market had peaked and was slowing down. The new Trump administration, the rising costs of home building materials and labor and the rising mortgage rates all added fuel to the slow moving fire. Starting in January of 2017, sales and prices started to climb again. There has been a lot of buying and selling over the last four months and prices are also finally starting to creep up. Right now, the Denver Foothills have a very low inventory of homes available for sale. According to a new report by Reverse.
How do I know if my house is overpriced?
Click to Enlarge (Source: Author generated from my excel data) I created this graph for you. It looks at the housing prices versus the estimated housing inventory levels. I added the estimated housing inventory in 2016 and 2017. Notice that home values continue to rise faster than housing inventory. It is time to be excited. I think that home values are going to continue to rise in Colorado over the next few months. Low inventory coupled with rising prices. How can you add to the buying/selling pressure for your home? The very first thing you can do is make your home look better. Paint your walls, clean your gutters and do any other maintenance work you can do yourself. Make your home look like a home. There are also professionals who can help.
The Colorado Home Inventory Problem
Colorado’s home inventory is so low that it is not even considered a strong seller’s market right now. Some areas of the state are considered very bad seller’s markets. This means that homes are going into foreclosure faster and it is taking a longer time for homes to sell. People are starting to believe the crisis is over for them. Most people that buy homes aren’t going to be in a panic and rush to buy one. They are going to be more cautious. The problem is it is going to take sellers that don’t mind a little risk. Those that are getting homes foreclosed on are just like buyers. They are going to buy something with less risk and more value for their money. More Home Sales That is where buyers are going to come in. They are going to get more aggressive.
How will things get better for buyers?
No doubt there are challenges for buyers in 2019. These include higher mortgage rates. But in 2021 we will see a more positive development for buyers. The single largest factor that is responsible for Colorado inventory not picking up is price increases. As the price of homes continues to increase it is pricing out more people from the market. The next year you will start to see that cause the inventory to begin increasing again. Right now it is just a trickle. But in 2021 we will see that trend increase. How can you benefit from this? If you are a first time home buyer you will have a chance to purchase a home in 2021. It will be a good time to buy because the price is rising but it will be difficult to get a loan.
What is Colorado Home Inventory?
Colorado currently has a lot of homes for sale compared to past decades. With that said there is a lot of competition for a limited amount of homes. Investors are driving up prices for homes by offering cheap loans, refinancing old mortgages, and selling their current home to buy a new one. This is pricing potential buyers out of the market and lowering inventory. Colorado is not alone in having a low inventory. Across the country home buyers are struggling to find homes. If you’re planning on moving this year don’t delay! You should be able to find the home of your dreams. What is Denver Home Inventory? Denver is a hot market. For many people, this is the only market they will buy in. The increased price makes it more expensive than most people will be able to afford.
Is Colorado Homes “Out Of Inventory”?
It’s a catch-22. Low inventory has lead to higher prices. Both inventory and prices are down across the state but in some areas, like the Denver Foothills, inventory is now up by over 30 percent since last year. That is a big difference and a promising trend for buyers who have been shut out of the market for the last year. Inventory is important for everyone and is a big factor for the economy. If there is a low supply and no activity, it is not only costing money to try to buy a home, but it’s hurting home values in the area. When inventory goes up, the opposite happens. Inventory: Is it coming back? It looks like it. According to Realtor.com, the Denver Foothills is getting a big boost in inventory.
Why is there a shortage of inventory in the Denver Foothills?
When there is less inventory, prices go up. If more homes are on the market than homes for sale, buyers compete to buy homes that are priced higher than they should be. It’s a “perfect storm” for prices to increase quickly. Who is going to help the buyer’s market out in 2021? An influx of jobs, millennials, and empty nesters. More jobs, like in Colorado, also mean more supply. New construction will be higher and higher until it reaches a point where prices begin to decrease. Not everyone will be able to find that perfect home but prices will be falling. When the home inventory is low, there is plenty of competition to buy. When more homes are for sale than homes for sale, you get price increases in some areas and sales volume drops in others.
What are the lowest days on market in Colorado and why does it matter?
The best way to figure out a reason for a low inventory of homes for sale is by looking at the lowest days on market. The data is from Denver Metro Inventory Report from Trulia and Morningstar. The Denver Metro Inventory Report shows the lowest inventory on the market for Denver, Boulder, and Fort Collins. Here are the last year’s median home values along with the days on market, all of which are part of the Denver Metro Inventory Report. Denver Metro Median Home Values The median home price for the Denver Metro is $374,000 with homes listed for just under 100 days on the market. Riverside Median Home Values The median home price for the Riverside metro area is $453,000 with homes listed for 93 days on the market. What is the relationship between housing inventory and home prices?
It’s no secret that the Colorado economy has been struggling. Sales are down, inventory is low and prices are increasing at a much faster rate than the amount of people actually buying. As the market in the state of Colorado and Denver Foothills has gotten worse it’s definitely contributed to the drought in homes in the area. According to the Denver Business Journal, data from real-estate market analyst CoreLogic showed that the number of homes sold in the state decreased 10 percent in September. CoreLogic shows that 4,309 homes were sold in Colorado which is the fewest number of homes sold for that month in the last 5 years. The problem here is the lack of inventory. It is way lower than it was just a few years ago.
The improving trend in home inventory in the Denver Foothills and its surrounding areas could mean that buyers will have an easier time finding a home to buy in the future. Additionally, the improving trend in home inventory means that home values will also start to improve again. Because of this trend and the current low home prices in the area, it is not a bad idea to start looking for your next home right now. Click the link below to read more about the state of the Denver Foothills market.