This past year we saw a continue trend of record low inventory, most notably in December with fewer than 4,000 active listings in the Denver Metro Area according the DMAR market trends report. This low inventory trend is predicted to continue into 2018 as we still are not building enough homes to meet the growing demands. On a positive note builder confidence has improved nationwide which is encouraging builders to continue to bring new developments to the market. There is also a belief that more sellers should feel ready and willing to list in 2018 due to low unemployment and overall consumer confidence. This is according to the 2017 Annual Report produced by REcolorado. While we are all hoping to see more inventory the belief is we will not be seeing any significant relief in this coming year and the housing market will continue to be very completive for buyers.
In 2017 the metro-Denver housing market for combined single-family and condo sales saw the average sold price hit a record high of $435,097 and the median sold price also hit a record high of $378,500. Prices in 2017 continued to increase year over year, but at a slower rate than previous years according to DMAR, the Colorado Association of Realtors, and the S&P Case-Schiller Home Price Index. While prices are expected to rise in 2018 it is believed to be at a slower rate. Another reason for the predicted slower price gains this year is due to buyers pushing back on what they are willing to pay for a home, due largely in part to higher interest rates and overall wages not keeping pace with the cost of living.
Tax Law Changes
The tax bill recently signed in to law by President Trump will have an impact on the housing market this year. While some markets in the higher priced coastal areas and states that have higher property tax values, will feel a stronger impact, we will still see an impact in the Denver Metro area. Some of these changes that will affect us is the mortgage interest deduction and property tax deductions, which are both huge benefits for home owners. If you haven’t already consulted with your tax professional, I highly recommend you do to find out how the changes may affect you directly.
The Fed did hike rates in 2017b three times and two in 2016, this only moved the cost of a home loan slightly higher and still sitting at an overall historic low. The Fed has said it will perform another three rate hikes in 2018, which experts believe the mortgage rates will finish the year between 4% and 4.5%. This should not be enough to have a huge effect on buying power for most and again is still at a historic low rate. However, as this trend continues rates should eventually end up back in the 5% to 6% range which is more of an average rate. So it is still a good time to take advantage of the relatively low cost to borrow money.
There are many areas that can affect the national housing market and the Denver Metro Market, and as I mentioned in the beginning there is no way to totally know what our markets will do this year. This being said it seems to be a consensus belief that 2018 will continue to be a completive and strong housing market for the Denver Metro Area. People are continue to move to our wonderful city and inventory is still low. It really comes down to supply and demand and until there is more balance in this area we will continue to see home price gains, multiple offers, and short listing periods. If you are thinking of buying just be prepared with your financing and a good real estate agent to help your write a competitive offer. If you are selling be prepared to have your home sell fast and be sure to price it right. Just because this is a strong seller market, doesn’t mean buyers are willing to overpay for a home. It is still important to price your home right.