Call Me Today: (303) 960-9165

January 2017: Market Projections For The Year Ahead

Happy New Year! Now that the holidays are over it’s the perfect time to talk about what I think the real estate market will look like in 2017. So let’s jump right in.

  1. Average Home Price: The average price of a single-family home in metro Denver increased another 9.07 percent in 2016, finishing the year at $442,467. I believe 2017 will be another strong year with an average price increase of 6-8 percent and here’s why: The number one driver of home price change is the amount of inventory on the market.In 2007, for example, we had a peak of 31,000 properties on the market and prices DROPPED 14 percent, while in 2016 we averaged just 7,000 properties on the market so prices ROSE more than 9 percent. For the past several years we have had record low inventory in metro Denver with absolutely no sign of it increasing. Until it does there will continue to be tremendous upward pressure on prices as demand outstrips supply. Where will the new supply of home inventory come from? It won’t be bank-owned properties or shortsales – our metro Denver economy is as strong as it’s ever been and a better economy means fewer distressed properties. The additional supply will eventually come from home owners who finally realize what a great market it is and decide to put their home up for sale. But when this will happen is anyone’s guess.Part of the issue is an interesting catch-22 where many potential sellers look at the market and think they can’t find their dream home because of the lack of inventory – therefore they don’t put their homes on the market – thereby contributing to the lack of inventory. I frankly don’t see any reason to think this will change anytime soon. Low inventory and rising prices are here to stay for the foreseeable future.
  2. Number of Homes Sold: There was a very small increase in the number of single-family homes sold in 2016 vs. 2015 of just 0.47 percent. So while prices rose strongly, the number of sales was flat simply because there was so little inventory on the market to buy. I don’t foresee any dramatic change in 2017. I expect a 3-4 percent increase in 2017 home sales, if only because our Denver metro population is rising 1.5+ percent per year and all these people need to live somewhere!
  3. The Condo & Townhouse Market: For the fourth year in a row the condo and townhouse market did even better than the single-family market in 2016 with an average price increase of 12.1 percent! Just like the single-family market I don’t see any evidence that would lead me to believe this will change anytime soon. The inventory has been at rock bottom for years and until more attached inventory comes on the market prices will continue to rise. The one caveat to this may be the luxury attached market. There has been a tremendous boom in attached new builds the past few years and this market began showing signs of cooling in 2016.  
  4. The Investor Market: I think the real estate investor market will remain strong with very little change in the outlook. The fix and flip market will continue to be profitable for those who can find underpriced homes to buy and repair. They’re out there but it takes tools, patience, and work to find them. Once you get one fixed up, selling is the easy part due to the lack of competing inventory. The buy-and-hold market will continue to be extremely generous to long-term investors. Vacancy rates are still at record lows and rents continue to skyrocket. It’s not difficult to buy a rental property in today’s environment and put it on the path to be paid off in 12-13 years. For building long-term wealth it’s tough to compete with rental property ownership. That’s the one thing that never changes!

MONTHLY MARKET SNAPSHOT

UPDATED PRICE CHANGE MAPS

MONTHLY READS AND RANTS

Share