Average national mortgage rates

Real Estate Market Update – What is Really Going on in the Market?

Real Estate Market Update – What is Really Going on in the Market?

There is no doubt things are crazy out in the world of real estate. Not only are buyers needing to deal with 7% interest rates, low inventory, stubbornly high home prices and possibly needing to pay their own agent or go with no representation. It truly sucks to be a buyer…and it isn’t getting better. 

Interest Rates are Still Higher Than Buyers Remember

Interest rates in the last 50 years have averaged in the mid 7’s. We are not actually “high”. We are average. Just higher than most people remember. Although I recall my parents having a 17% interest rate in the 70s. As you can see by the chart we are pretty steady at around 7%

Buyers really need to understand this is our reality. We are going to be stuck in the 6s for a while. This is not going to change. Buyers need to find good real estate agents that know how to write an offer and help them save on these higher interest rates. Buyers are getting too much information and not correctly interpreting it. Buyers need to listen to their agent. And buyers ALWAYS need an agent. This is one of your biggest investments. You need a pro handling your real estate transactions.

We are seeing more buyers come to the market but they are really skittish. They are very slow in acting and showing the sense of urgency we had just 2 years ago. We are seeing a higher amount of buyer remorse with more terminations of contracts and more homes coming “back on market”. We are also seeing some price reductions as well.

We would still consider this to be a sellers market. Although buyers are getting some concessions and contract items, they do not have “control” of pricing yet. We are still seeing values rise in most markets. Especially the Denver/Denver Foothills Market.

Why Are Home Values Still Rising in The Denver Foothills?

Simple. Supply and demand. There is just not enough units for the amount of people. This is for rental and sales. Our inventory is scary low. This will most likely continue through the near future. This is what kept our values so high in 2008. We only corrected about 8% and gained that back the next year. Although other markets aren’t so lucky. Some SW Florida markets are already seeing price corrections due to being overbought.

The Denver Foothills always seem to hold value better than a lot of areas. It is just a perfect location for so many types of interests. This market really is pretty solid. It will most likely continue to remain strong. There is no indication of any type of correction no matter how hard buyers try.

The chart below is the last 12 months in the entire Denver MLS. As you can see close prices continue to rise:

Don’t Get Me Wrong the Market Has Been Changing

There is something happening in the market. There is no doubt this isn’t a healthy market. Not as far as I would describe it. There is too much uncertainty. At least during the last boom we knew what the market was doing. We knew interest rates were not going down anytime soon. We now have buyers hoping, just hoping rates would drop just a little. Never mind the 3% and under rates. Every time they see a news report saying rates will drop this year they get a little more buyer hesitation. Too many buyers think of their home as a piggy bank. Trying to time the market and interest rates just right. Problem is that’s impossible. We also will not see crazy appreciation like the last 10 years again in our lifetime.

There is no telling the direction of the market. Are interest rates going down? Most likely. But when? 3 or 4 years? Next month? No one knows. Buy now, sell now plan accordingly and adapt. At least we know what the market is now.

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