Living in one of the hotest housing markets – Denver is in the top 10% nationwide – means a lot of ups and downs, multiple offers on houses, home prices continuing to rise. Needless to say, it’s a roller coaster for home owners looking to purchase, realtors trying to assistance their clients and first time buyers looking to get into the real estate game!
Accoriding to an Axios article written in March, Colorado home prices increased an average of 20% in 2021, exceeding national rates. And with the low inventory and high demand, the probablity of home prices falling isn’t on the horizon.
But what about the impeeding recession headlines are calling for? What if the market crashes like 2008!? While we may be heading into a recession, the only way to combat fear is with facts and preperation.
Here’s a great article that explains things a bit…in terms we can actually understand!
A few things I thought were great distinctions:
- Today’s market irregularities are due to a housing supply that can’t meet demand, while the housing bubble of the mid-2000s was caused by greater access to mortgage financing. Basically bad lending practices aren’t happening now! “Last cycle, a dog could get a mortgage,” Ali Wolf, the chief economist for Zonda, a homebuilding prop tech company
- Nominal median household income has increased approximately 40% from that time period, according to Census data. People are in stronger financial situations and have more buying power!
- Home values have been maintaining historic highs. Data shows that the average mortgage borrower currently owns about $185,000 in “tappable” home equity, or the amount of money a homeowner can access while retaining at least 20% equity in their homes, which mortgage lenders often require. We are in one of the best appreciating markets – annual appreciation of 9.95% (on average – last year it was more like 20+%) puts Denver in the top 10% nationally!
Bottom line – and what I advise my clients on – knowing what you can afford, understanding your financial situation and the goals you have should be something you sit down and map out prior to your home search. What do your current monthly expenses look like? How long do you plan to be in the area or home? While you can’t plan for everything – life is what happens when you’re busy making other plans – you can make decisions based on your situation, your lifestyle and your goals.
Have questions? Don’t hesitate to reach out!