In a recent article from CNN, “Housing Bubble Fears Have Returned”, there is new talk of the housing market dropping based on a bubble. The question has returned. Are we really facing a bubble?
According to the article, “Home prices kept rising in August and September in most major American cities. That’s great news for people looking to sell. However, some cracks appear to be forming in the housing market again. It may not be another bubble bursting like nearly 10 years ago, but it still may be a cause for concern.”
Forbes put out an article two weeks ago with more gloom. “Housing Markets Turning Ugly In 2019”. Forbes article also points to the impending cracks in the market saying, “But as the United States economy enters its 10th year of expansion, several industries and sectors are showing signs of weakness, notably housing.”
Getting A Better Look
Let’s put this into perspective. While the headlines suggest we are heading towards a crash, there is very little real data to support the idea. The national economy is strong, and our local market continues to show growth. Even in the Forbes article the author says, “Mortgage rates have been declining, yet prices remain high and supply tight across many of the most popular markets.” In other words, we remain in a seller’s market.
Not in My Neighborhood
Both CNN and Forbes have a legitimate story. It just doesn’t apply to Colorado. There are areas in the country that are struggling, but you have to look to the deep south, like Florida and Virginia to see the issues. The western half of the United States continues to support a strong market.
Colorado tends to be one of the last states to feel the effects of an economic downturn, and usually to a lesser degree. Those who have lived in Colorado for more than a few years have seen this. The crisis starts on the coasts and moves towards the middle of the country. By the time it gets here it doesn’t seem to be as bad, and doesn’t last as long.
Heading back to the Norm
There is no denying changes are happening in the Colorado real estate market, but it is far from a bubble or crash. We are seeing a shift from an extreme seller’s market to a more normalized market. We have been in such a wildly hot market for so long that as we cool down it feels like things are collapsing. But that isn’t the case.
With more inventory to choose from, buyers have more choices, yet prices continue to rise and sales remain strong. A “normal” market is typically defined by homes selling in four months. According to RE Colorado, single family homes under $1 million in Denver are averaging 35 Days on Market (DOM), up two days from October 2018. The market has begun to change, but we are still in a seller’s market.
Do Things Feel Different?
Knowing we are still in a seller’s market, there does seem to be a different feel in the air when it comes to real estate in Denver. It’s the things you can’t really measure or put on a graph. The feeling of desperation is gone. Three years ago buyers were desperate to purchase. Inventory was low and competition was at an all time high. More inventory and higher prices have calmed the storm.
Sellers who have watched properties go under contract in hours, not days and weeks are struggling to adjust to the change. This is another unquantifiable feeling. After a couple of weeks on the market there is a sense of urgency that seems to arise. Sellers are getting nervous when the quick sale doesn’t happen, even though the time frame is still well within reason.
No Bubbles Here
The Denver real estate market has certainly shifted, but the likelihood of a big crash is slim. National headlines may speak of impending doom, but the issues are in other states and even more so in other countries. It is still a great time for sellers to sell. For buyers, the time is now to go make a deal. Inventory is up, prices continue to creep higher and interest rates remain at all-time lows. It’s a solid market in Denver and good for both sides of the transaction.