Welcome Home! First Denver, then Summit County
September 24, 2010
Why do we care about the market in Denver? Because … what happens in the Denver and Front Range of Colorado real estate market affects Summit County within about a 12-24 month period. Plus, the Denver market includes the majority of our customers, so the two markets are linked by the owners. Most Summit County homes are owned by folks who don’t live here, and the bulk of those owners are from elsewhere in Colorado, primarily the Front Range. If we pay attention to what’s happening down the hill, we might get a glimpse of what’s about to happen here.Have Denver home prices hit the bottom? Of course it depends on price range, and location, but many prices in the Denver Metro area have increased in 2010. Current inventory of single family and condos in the Denver market is the second lowest in five years. The absorption rate for the current supply of single family homes, under $250,000, in the Denver market surveyed is just 5.8 months, while for condos, the supply will last just 7.6 months. Conclusion? Prices are most affected by supply and demand. If you are in a price range or location with less than an eight-month supply of homes, prices are going to increase over the next 12 months. So, that’s what we think about Denver; what to do about your property that’s for sale here? Mark it down and sell it, to position yourself for gains in the future. Currently, both fixed and jumbo mortgage rates are at historical lows, the lowest in 50 years. Assuming that the next 12-24 months will bring about a reversal of the decline we’re currently experiencing in Summit County, now is the best time to move up, or move over. As soon as interest rates begin to increase, demand on inventory will also increase, and so too will prices. So, sell now to reap the most out of the impending turn-around. The goal of selling any asset is to position yourself to build wealth. While selling today at a lowered price might seem counter-productive, let’s examine the future of that decision. In holding a home that you purchased at the height of the market, and which might appreciate 3 percent per year in the near term, your gain on that investment will be less over the next 10 years. However, if you were to purchase a similar home today, but at the 15-25 percent discount currently occurring in the market, you’d realize the same 3 percent gain over the next 10 years, but you will gain on the discounted amount AND the appreciation. In other words, sell for less now … buy the same thing or more for a lesser price, and make a bigger jump into the future. It might be one step backwards now, but several steps forward 24 months from now. Examine the market we’re in, speak to a knowledgeable Realtor, and run the numbers. You’ll make more by lowering your price and selling now than by “waiting for the market to turn.”Welcome Home is written by Butch Elich & Paula Parker. Search for them by name on Google, Twitter, or Facebook.