September 21, 2022
As published in DMAR Market Trends, September 2022
Two Colorado cities made U.S. News & World Report’s list of Top 10 Best Places to Live in the U.S. for 2022-2023. Colorado Springs ranked second and Boulder came in fourth.
People moving to Denver are coming armed with home-buying budgets 12% larger than what locals have, according to a new Redfin analysis. That gap puts Denver in the top 10 cities nationwide where the purchasing power of out-of-towners outpaced that of existing residents—a factor that’s significantly driving up home prices and critically limiting housing supply.
Typically, resort markets are more volatile, but that is changing due to two structural changes: 1) Remote workers are moving to resorts. 2) Short-term rentals (VRBO and Airbnb) have changed the economics as people can now own a second home and cover some, or the majority of, the holding cost in some resort towns.
Between 2020 and 2021, the U.S. Census Bureau estimated Denver’s population dipped for the first time in at least 10 years, which is likely related to remote workers who arrived during the pandemic and then left after the return to normalcy. Former Denverites were overwhelmingly likely to stay close to the city and just jump over the nearest border to another town. Those who lived in west Denver neighborhoods mostly ended up in Lakewood or Arvada, a little further west. People from east Denver neighborhoods crossed the eastern border to Aurora. Many people who ended up in Englewood and Littleton previously lived in south Denver.
Fannie Mae’s Economic & Strategic Research Group expects total home sales to decrease by 16.2% in 2022, a further downward revision from July’s projected drop of 15.6%.
According to the Chief Economist for the National Association of Realtors®, Lawrence Yun, we’re witnessing a housing recession in terms of declining home sales and home building. It’s not a recession in home prices. Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price.
According to Nicole Bachaud, senior economist at Zillow, “Falling prices should bring demand back to the market and pressure prices to go right back up, especially as inventory is stabilizing at a much lower level than the pre-pandemic norm.”
Careful analysis of the market for pricing, longer showing windows (think 45 minutes to two hours), strategically marketed open houses, inspection negotiations, offers considered upon receipt (instead of all offers due by a certain deadline) and other pre-pandemic norms will instill more confidence in buyers and sellers and less stress for everyone.
President Biden’s decision to waive up to $20,000 in student loan debt will come as a welcome relief to an estimated 771,000 Coloradans who collectively owe approximately $29 billion in student loans. With extra cash in their pockets, will this entice buyers to enter the housing market—trading student loan payments for mortgage payments?
A new ballot measure that would generate $270 million annually for affordable housing is headed for Colorado voter review after qualifying for the November 2022 ballot.
It is estimated that 250,000 or more Realtors® will exit the market. Consumers are looking for quality real estate experts who can help them with the biggest financial decision they make in their lives, not part-timers whose side gig is real estate.