I hear the same question again and again: “is it a good time to buy a house in Colorado?”
It’s a popular question because so many have been on the outside of the real estate market looking in… waiting for home prices to come back to earth, or at least show signs of calming down.
After five consecutive years of aggressive price increases in Denver and other metro markets in Colorado, some are starting to wonder if the market is ever going to cool down enough for them to feel comfortable jumping in.
While I can’t give you personalized advice until I know your unique real estate goals and budget, I do feel confident saying that 2018’s Colorado housing market will be more inviting to people stuck on the sidelines for the past few years.
Why I Consider 2018 a Good Time to Buy a House in Colorado
As a broker based in the western suburbs of Denver (Lakewood, Wheat Ridge, Arvada, Westminster, Golden), my focus is solely on that metro area. However, since the urban Denver market is such an important bellwether of metro Denver as a whole, I think I have a perspective that will be of value to people looking at any part of the metro area.
First, let’s just look at the cost of waiting.
If you were thinking about buying a home in 2015 but decided to wait because prices weren’t quite to your liking, here’s what you’ve witnessed in the ensuing years.
Average sales pricing of a single-family residential home in Denver:
- In May 2015 — $406,000
- In May 2016 — $451,000
- In May 2017 — $524,000
The overall cost of buying a home has gone up even more when you account for rising interest rates driving up the total expense of a 30-year mortgage. Rates rose in 2017 and virtually everyone is predicting that they will continue to rise later in 2018 and into 2019.
Looking at recent trends for home prices and interest rates, it’s hard to make the case that “waiting out the market” is a good strategy in Colorado.
I don’t want to sound like “it’s not getting any better, so you may as well buy now,” is the only way to look at the current market. I actually think 2018 will develop in a way that many left-out buyers will find positive and inviting.
The headline of a recent Denver Post article shows how some experts are starting to get a rosier outlook on 2018. In the article, a metro Denver economist at a research firm shared optimism that the metro area market will experience a calming down in the months ahead:
“Our expectation is that 2018 may indeed be the year that home prices in metro Denver increase at about the same five percent-ish rate as the nation,”
That’s definitely not the same as predicting free falling prices and incredible bargains popping up, but compared to the way things have been going the past five years, returning to national average price growth is a relief.
The combination of flattening prices and still-low (but soon to rise) interest rates should have buyers thinking about getting off the sidelines and jumping into the game in 2018.
One Potential Catch… And a Solution
One factor that does have some real estate watchers concerned in 2018 is the low inventory of available homes in metro Denver. It’s actually a statewide and nationwide problem.
High demand for a small inventory of homes on the market could keep prices on the same incline path they’ve been recently. If this continues in Denver, I believe there are still nearby opportunities out there for buyers who are tired of waiting out the market.
Some western Denver suburban cities have done a better job of having new construction growth keep pace with demand. One of the communities experiencing a residential construction boom in Wheat Ridge.
I’ve written recently about a couple of mixed-use construction projects in Wheat Ridge, but residential housing, in particular, is booming in the area.
That growing inventory has helped keep the lid on competition for individual properties. The lack of bidding wars has translated to more reasonable home prices.
If you want to know if 2018 is a good time to buy a house in Colorado, my best answer is that it’s better to act now rather than wait it out. Communities like Wheat Ridge, Arvada, and Lakewood offer close access to Denver city living, but with much friendlier markets.
There’s no advantage to waiting!
For advice on finding a house that meets your needs in Denver, call me, Carla Knight, at 720-626-9747, email me at CarlaKnightHomes@gmail.com, or contact me online.