Real Estate in Denver Metro Area Seeing Incredible Rebound for Spring 2013

 

 

Real Estate in Denver Metro Area Seeing Incredible Rebound:

Early Spring 2013

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The early spring of 2013 has seen an incredible rebound in the housing market throughout metro Denver.  In a welcome turn-around, sellers are seeing multiple offers, cash buyers and sometimes going under contract within 24 hours of listing.
For home buyers, this has been a somewhat frustrating time.  Inventory is at a low not experienced since 1985 (Source: Gary Bauer, Metrolist).  Anxious buyers are scrambling to take advantage of the low mortgage interest rates, yet they are finding out that they need to be first in line when their dream home comes on the market.

Why is inventory so low? This is an interesting time for current home owners.  Demand for homes is rising, interest rates are low and rents are increasing.  All of these factors are creating a huge new crop of buyers ready to enter the market.  However there have been issues brewing over the past few years that are still keeping inventory low.  During the downturn, new home construction came to a near complete halt.  This contraction has not corrected yet, so there is no pipeline of newly constructed inventory available.
What’s more, roughly 20% of home owners are still in a negative equity position (Source: Denver Post Business Section).  These home owners still owe more on their mortage than they could sell for at this time and do not have the resources to bring money to the closing table to make up the difference.  Things are improving enough overall that this 20% is not in a position where they must try to do a short sale.  They are instead choosing to “wait out the market.”

How does this affect home values?
When demand outpaces supply, prices come up.  This will be a welcome correction when compared to the losses that home owners saw over the past several years.
In most areas, prices are increasing rapidly.  The difference between this increase and the “bubble” is vast.  Because of dishonest dealings that sometimes accompanied those sales – ie. “no document” loans, appraisers who were in the lenders’ “pocket”, etc – regulations have been put into place to ensure more honest dealings between all parties.  For many would-be home sellers, now is the time to jump back into the market.
Clever home buyers are getting creative with their agents.  Buyers’ agents are even going so far as to mail letters to home owners in their buyers’ preferred area whose homes are not on the market.  The idea is to let those owners know that people are looking in the area, thereby relieving some of the stress of listing.  (Namely, the question of whether or not there are buyers for what they are selling!)
Home buyers are doing their part by being pre-qualified by lenders before they search so that they can submit an offer without delay when they find the right property.

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