What’s Ahead For Colorado Real Estate?
2021 has been something else for the real estate market. The Colorado Association of Realtors reports that the sales price of homes in Colorado has increased 15% since October of 2020. Some areas like Boulder County and La Plata County have had price increases of over 20%. While sellers are ecstatic over the rising values, home buyers are worried. They fear being priced out of the market and are even more concerned that if they were to buy a home today, the real estate market will crash and leave them underwater.
The good news is, real estate experts do not expect any catastrophic crash like we saw over a decade ago. To help ease your fears, let’s look at why you shouldn’t worry that the Colorado real estate market is in for a sharp decline in values.
Colorado Real Estate Inventory Is Incredibly Low
Real estate inventory has been lower than usual for the past few years. Then the perfect storm of Covid, construction delays, the foreclosure moratorium, and overall uncertainty led to even fewer homes getting listed for sale. For example, La Plata County had a 41% decline in single-family homes listed for sale on the market in October 2021 compared to October 2020. Arapahoe County’s inventory was even worse and saw a 53.5% decrease during that same period. When inventory is that low, prices are going to increase.
Home Buyers Are Out In Full Force
Even though Colorado real estate inventory is low, demand is sky-high. One reason for the increase in demand is the low interest rates we’ve had for the last year. Lower interest rates mean that your money goes further, so monthly payments have not been significantly impacted despite the increase in home values.
Demand for homes in what are typically vacation areas has increased since companies are allowing for remote work. Since employees no longer have to live within a reasonable distance for commuting purposes, they opt to move to a more desirable, laid-back, and often scenic location. Again, this increased demand has caused home prices to rise.
What To Expect In 2022
So, what does this mean as we move into the new year? Experts predict that interest rates will increase, which will cause home values to drop slightly. The slight dip in values will be nothing close to a crash; conditions are so much different than they were in the mid-2000s, so a “bubble burst” is not something that is on the horizon. Today’s lending practices are much different than they were leading up to the crash in 2006, and more documentation is required to get a loan, plus lenders protect themselves with private mortgage insurance.
Due to the supply chain issues, we may see a slowdown in home construction which will not help the inventory troubles. However, these issues have caused the price of nearly everything related to building a home to increase, which will mean more expensive new construction homes.
Bottom line, if you want to buy a home in Colorado, you should do so sooner than later since prices will probably continue to climb once the initial shock of the increase in interest rates subsides.
If you’d like to begin the process, contact us, and we can discuss the lending and home buying process in greater detail and start working toward getting you into a new home.