For the month of August 2015, according to Realtor.com, the Denver housing market slipped to 3rd hottest in the country only behind Dallas (#2) and San Francisco (#1) based on number of views per listing and the median age of each listing.
As mentioned in my last blog post I am noticing as are my peers the euphoria of the market from the Spring seems to have dissipated somewhat. While inventory is still extremely limited AND I believe all would agree we are in a seller’s market, there is light at the end of the tunnel for buyers.
First, I have witnessed some price adjustments coupled with homes either on the market longer or returning to the market after being placed under contract. Usually if a home was under contract and returns to the market, the asking price may come down slightly to increase interest.
Second, while the forecast for higher interest rates on mortgages in the Fall may still be valid, with the equity markets in disarray and now the Federal Reserve ,most likely holding the Fed Fund Rate static, the impending rise of mortgage interest rates seems to be on hold. Related, as equity market instability generally blazes a trail of cash into Treasury Bonds, mortgage rates will continue to be low. Of note, any mortgage rate below 5% is historically low.
Third, the price gains witnessed over the last 2-3 years may have finally plateaued which I believe is positive for both buyers and sellers. A market which shows a steep upward trajectory usually indicates a bubble is forming. As prices stabilize and we witness more equilibrium between sellers and buyers, also known as supply and demand, the overall health of the housing market should continue to be positive.
While we may have slipped to 3rd hottest housing market in the country, I will take it as a sign of stability. San Francisco is land-constrained, Dallas prices are substantially lower than Denver, thus I am not concerned and look forward to a healthier overall real estate market heading into the historically slower fall and holiday periods.