The Denver Metro real estate market is still treating sellers well and buyers might have bit of an edge during the fall and winter seasons. If you are selling and buying, particularly if you are “moving up” from a lower-priced home to one with a higher price tag, it’s still a perfect storm.
Are you tinkering with the idea of selling?
Demand is still high. The current housing inventory is still under the 6-month supply that is needed for a normalized housing market. Buyers don’t simply hibernate during the fall and winter months. Serious buyers are still qualified and ready to move if they find the right home for them. And there are still a ton of buyers out in the Denver Metro area right now.
The process might be quicker. The current market has forced buyers to do all of their homework before they submit an offer. Also, due to the holidays, buyers are motivated to move through the process quickly so as not to interfere with festivities. Not to mention, appraisers, inspectors, and other players in real estate transactions are not as busy right now. Appraisals are happening within days rather than weeks right now.
Now is a great time to move up. The inventory of homes for sale at higher price ranges has forced these price points into a buyer’s market. This means that if you are planning on selling a trade-up home, your home at the lower price point will sell quickly and you will be able to be in a stronger negotiating position for your move- up home.
What if you want to buy?
Prices Are Typically Lower
The concept that buyers can get a better bang for their buck in the fall has been a popular notion for some time, but two recent reports validated that line of thought with data from actual home sales. According to a 2015 report by RealtyTrac, sales prices are typically 2.6% below fair market value during October — a steeper discount than any other month of the year. Another report by NerdWallet found that sales prices drop about 2.96% from summer to fall, which is roughly an $8,300 discount for the median home. It’s also worth noting that while listing prices don’t decrease much, sales prices do, and that’s the price that counts for potential buyers. The delta between fall and summer months is less marked in Denver, however.
There’s Less Competition
The majority of people buy a home in spring or summer, when inventory is traditionally high. This gives families time to make their move before the school year starts, but the tradeoff is that buyers are faced with strong competition and often pay higher than asking price during that time. People who buy in fall, however, have less competition, and sellers are more motivated. This means more negotiating power for the buyer, which often results in a better deal.
There’s Still Inventory
It’s true that the inventory of homes for sale is at its peak during spring and summer, but when you buy in the fall, there’s still a decent supply of homes left to choose from. Buying a home in the fall gives you the best of both worlds — lower prices and less competition but still enough inventory to find the home you want.
Interest Rates Are Still Low!
Higher Rates = Less Buying Power
As rates go up, the amount of home you can afford goes down. For every 1.00% increase in interest rates, your buying power decreases by about 10.00%.
For example, let’s say you can afford $1,194 on your monthly principal and interest payment. With a 30-year fixed loan, a 20.00% down payment, and an interest rate of 4.00% (assumed annual percentage rate [APR] of 4.053%*), you could borrow $250,000 to purchase a home around $312,500.
But if rates go up to 5.00% (APR 5.056%*), the amount of home you can afford decreases to $278,025, causing you to lose $34,475 of buying power. That’s a lot of buying power!