It’s a new year (yeah!!) and at Focus Real Estate this is a time of year we like to take some time to review the state of the real estate market.
We also like to share what we see with you; our past clients, neighbors, friends and family.
The goal is not to overwhelm you with stats, but instead to just provide you with a few key take-aways in case you or someone you know is considering making a move in 2021.
So enjoy these take-aways that we’ve noticed and please let us know if we can be of service in the new year.
What are the big trends in the local real estate market going into 2021?
The pandemic caused a lot of people to rethink where they live and ultimately, to move.
Many homeowners, now all of a sudden working from home and unable to enjoy the amenities of city life, have moved to more affordable suburban locations. Whether it was from Manhattan to Connecticut, Denver to Summit County or Lodo lofts to Central Park homes, we noticed many buyers were trading in their City living for a little more sf, a home office and a little more outdoor space. Will this trend continue or will dense City living be more in demand than ever when the pandemic ends? The jury is out still.
Home prices have gone through the roof in 2020!
Denver single family home prices rose roughly 14% year over year from December 2019 to December 2020. That means on a home that was $500,000 to start 2020 it’s now worth $570,000! How does the market do so well in such a tumultuous year? It was buoyed by historically low interest rates, record low housing inventory, foreclosure/eviction moratoriums and the wave of buyers described above looking to make a lifestyle move.
Available home inventory is down significantly.
Available single family home inventory in December 2020 is down 69% from the year before. This low inventory, and the buyer competition it encourages, is one of the biggest reasons why home prices have gone up so dramatically. Bottom line…the market needs more homes for sale to move itself towards some semblance of balance.
Mortgage rates are at historically low levels.
When the pandemic hit in early 2020 the government quickly maneuvered to decrease interest rates. They did this to increase the number of buyers that could afford to purchase homes, which then boosts the competition for homes, which then boosts the prices of homes. Mortgage rates are still hovering in the high 2.0% range for 30 year fixed rates, which is unbelievable. (If you have a rate 3.75% or higher on your current mortgage let’s chat right away to get you with a trusted mortgage broker who can save you money with a refinance!)
Real estate commissions appear to be trending down due to competition.
Consumers have an abundance of options when they choose how to sell their home and this is putting downward pressure on the traditional “6%” commission model. It’s a good thing for you, the consumer, and at Focus we’re proactively leading the charge to provide the most value possible to clients. We’re now listing homes for 1.5% listing agent fees! We think the sweet spot is offering clients neighborhood expertise AND discounted commissions, so that’s what we do. You can learn more about our seller commissions in this Seller FAQ video.
Central Park Related News:
- Home inventory is as low as we’ve seen it. We’ve been helping buyers and sellers in Central Park for 10+ years now and with just 16 homes available on the market right now (as of late December) the inventory is as low as we’ve ever seen it. Tough for buyers, great for sellers.
- Central Park will soon be completely out of new build homes. After roughly 20 years of building homes in the neighborhood, the builders are running out of lots. There are just over 600 lots left available in North End, the final area, and they are selling fast. If you’re interested in this area you’ll find value in the website we’ve created to keep you informed on it, HomesInNorthEnd.com.
- New build home prices have been increasing. What’s cheaper now, a new build in Central Park or a resale home? Mariel Ross from our team has our answer for you in this recent Central Park Scoop blog post.
Buyer “Take-Aways” from these Trends:
- Buyers in the resale home market will very likely be competing against other buyers and they need to make competitive offers. This means to get a home buyers must offer strong prices, include “escalation clauses” which kick in and raise your price if there are other offers, limit appraisals, limit what will be requested at inspections, give the seller the timing they want and even offer some non-refundable earnest money after home inspections. A Focus agent can help you make a strong offer without solely relying on just paying the highest price.
- Buyers with offers that include a contingency to sell their current home are at a big disadvantage. With the current market demand for homes if you get a seller to accept your home sale contingency I’d be wondering why there are no other buyers going after that home. If you have any way to avoid having a home sale contingency you should avoid it. Here is a Buyer FAQ Video on that topic.
- Buyers in more urban areas looking to buy condos and townhomes may have more leverage than they realize. Yes the market is hot, but remember, there is a flight to suburban locations right now so dense urban locations are not as in demand as they used to be. Keep that in mind if you’re buying in one of those areas, you may have some room to negotiate.
- New build buyers will have to compete to get the lot and floor plan they want. There is a lot of buyer demand for the new builds in North End and buyers will have to start their process early, be patient and be persistent to get the home and the lot they want.
- Interest rates are ridiculously low, so if you’ve been waiting to buy you may want to talk to a trusted lender and see how much home you can afford. You may be surprised.
- Even when you’re buying a home you can take advantage of the trend towards lower Realtor commissions. At Focus, we offer a rebate to resale home buyers for part of the commission we are paid by the seller. This can oftentimes be thousands of dollars back in your pocket to use towards moving costs, furniture, etc. Learn more about that in this Buyer FAQ video.
Seller “Take-Aways” from these Trends:
- It may be a great time to sell your home if you’re considering it or if it’s an investment property. As we mentioned above, the pandemic motivated a lot of people to move but will that trend continue? Will home inventory and interest rates stay so low? We don’t have a crystal ball, but we do see our sellers having the leverage which makes now a great time to list your home.
- Multiple buyer (“bidding wars”) are possible if you price your home right, have it looking great and get it lots of online exposure. (for example with our 360 virtual models and our Facebook Lives where we introduce our listings to the market!) Keep in mind though that the homes that are most likely to get multiple buyers are the ones that appeal to the pandemic motivated buyer (single family homes, lots of sf, home offices, yards, etc)
- If you decide to stay put and you haven’t refinanced your existing mortgage you should investigate that asap! Reminder, if your rate is 3.75% or higher you could probably save money via a loan refinance.
We hope you found some nuggets of useful information in this quick update on the market. If you have any questions we’re here to help!
2020 was a roller coaster of a year, with all types of uncertainty. When it comes to your housing decisions we always come back these two simple, time-tested pieces of advice:
- First, you should be a homeowner for the long haul. Real estate, like the stock market, will have its ups and downs, but in the long run it’s been one of the best methods to grow wealth.
- Second, you should own a home you can truly afford. That way, if life throws you a financial curveball (anybody have one of those this year?) you don’t find yourself in a tight spot.
If you follow those two suggestions, we think homeownership is a great path for our clients.
If you’re considering a real estate move in 2021 we’d love to chat and see if we can be of service.
If moving isn’t on your radar, but you know someone who may be moving, please feel free to pass this along to them.
Better things to come in ’21. We hope to be back out and about with you soon.