A Metro Denver Real Estate Company
Let’s turn lemons into Lemonade. The market has begun to change. That does not mean that Sellers cannot sell or that buyers will not buy. Thursday Tips offers updates to assist an informed Novella Associate and their Buyers and Sellers on an ongoing basis.
Let’s consider the chart and quoted rates. First, the residential mortgage market has increased by 2% points since Christmas of 2021. If we add in the quoted points, the rate today for a 30-year conventional mortgage is 5.35 to 5.5% depending on lender and credit scores. We are seeing prices of everything we buy, especially food and disposables going up sharply, with the Federal Government showing an 8.5% inflationary jump in the past 12 months.
Why?
A combination of things that our popular media has difficulty explaining, but the majority is the trillions of Federal stimulus money created to provide relief for the effects of the pandemic. If money is created without economic support, then the result is inflation, which reflects in the price of everything. Energy policy limiting the future of petroleum products, or shifts in import volume contributes, and there is some effect based on the ego-driven war in Ukraine. Of course, easy money and a lack of housing inventory has worked to push housing prices beyond any reasonable expectation, but that has been a slowing rolling train wreck over a period of years. Increased family formation coupled with a lack of product forces prices higher, in some cases at bank-breaking levels.
Will things get better? Of course, but it will get worse before it gets better, and it will take a while. The United States has to recover from the shock of too much money and increase our production output to compensate. We will leave that problem to the nice economists to explain.
Housing Bubble?
There is a justifiable concern about the possibility of a housing crash. Many people, in and out of the real estate industry painfully remember 2009-2013. But, we have to remind everyone that inventory is very different today. There are simply more people wanting to buy a home than there are homes available, and the number of buyers has been rising. 2021 just finished with 6.1 million homes sold. We have high buyer demand, coupled with low inventory. This is a significantly different fundamental than when the bubble burst in 2009 and the truth is that the people who are purchasing these homes can afford them this time.
March 2022 Single Family Home Sales – By Price Range
How you ever wondered about the average SOLD price by price range? Novella Real Estate compiles these statistics each month so we can stay on top of market activity. It is interesting to see how little inventory we have in each price range. Of course the more expensive the home the longer it takes to sell!
The Days on Market gives a homeowner a clue about how long it will take to actually sell their home. The absorption rate is a figure that assumes if no other homes enter the market, how long it will take before there are no more homes for sale. A “balanced” market is one in which there is 6-months of inventory. We haven’t seen that in quite a while.
Novella Real Estate
5600 S. Quebec St., #150D
Greenwood Village, CO 80111
(303)350-5838
