Waiting for Changes to the Housing Market? Your Time Has Come
The shift of control from seller to buyer is happening now
If you’ve tried to hire a plumber, hire a company to repair your sprinkler system or seen all the construction cranes scattering the Denver Skyline, you know how good the home market has been and for how long.
When everything ‘home’ is doing well, the trade industries have less time to procure new business and sometimes take care of the business they already do have. At the same time, the real estate industry, especially in growing cities like Denver, has played host to a growing number of organizations offering their ‘ibuyer’ or algorithm-based technologies that replace, in their niche, the personal connection many of us associate with the broker/client relationship.
I offer no opinion on this technology other than to say that during its expansion, the market and economy in general have had uninterrupted growth, as well as experimentation-friendly environments in which to challenge the otherwise ‘normal’ way of doing things. Their first test though may be on the horizon as the shift from seller to buyer control is happening now and, in some areas, has already taken place.
The evidence of tide change comes from two key figures: the number of new coming listings to the market and the median price in which they’re absorbed.
The prevailing thought in Denver has been that we’ve seen rampant appreciation year after year in a seemingly uncontrollable amount of growth. The truth is however, according to data by the Colorado Association of Realtors, the city’s figurative peak appears to have ended nearly 1.5 to 2 years ago. From May 2014 to 2015 (as well as 2015 to 2016), the number of new listings entering the market decreased by 2% each year. During an already-historic inventory shortage, this heavily impacted the price increases based purely on supply. Since then however, we have seen double-digit increases year over year; 12% from 2016 to 2017, 11% from 2017 to 2018 and a whopping 17% increase in new listings since May of last year.
While the principal of supply and demand would suggest that such profound increases would negatively impact prices, we have seen a rapid slowing while not yet a decrease in price. From May 2014 to 2015, the median price in the Denver-metro area increased nearly 17% while alternatively, the last 12 months saw an increase of 3%. Additionally, a report by Metrostudy states that new home sales are down and perhaps most staggering; attached homes (condos, townhouses) represented 22% of the market in 2016 and more than 30% in 2018. You needn’t look much further to see the changes coming into view.
Change isn’t always a bad thing though, especially in the ‘home’ arena. When the trades return to neutral after a feast-mode, the chances of getting a plumber out same-day or a sprinkler contractor returning your call increases exponentially.
The new faces in real estate may flourish in the next phase of our economy or they may realize the models aren’t sustainable during that period. Whichever way it goes, be it stable or down, one thing is for certain ̶ the Denver-metro real estate market shows strength, sustainability and a demand the likes of which we’ve never seen. As demand balances, and as price appreciation slows, the dream of homeownership and the ability of a seller to provide homeownership is much closer to reality.
Matthew Leprino is a principal and realtor with The Ridgewood Company and a spokesperson for the Colorado Association of Realtors. He can be reached at: 303.482.1299 or firstname.lastname@example.org