Are you ready for a little shaking of the crystal ball for 2019!!!???
For those who still own a TI-83 Plus calculator and appreciate charts and graphs, this article is for you.
For those who don’t, you likely know a friend who does, so we encourage you to pass this along to them. They’ll think you’re a great friend if you do. :)
Without further ado…
Prediction #1: Interest rates will continue to climb and finish 2019 at around 5.3% (for 30-year fixed rate mortgages)
After record-low interest rates for most of this decade, rates are beginning to climb and should finish 2019 at around 5.3.%, which is essentially where they started in 2010.
Is that high or low? Historically speaking, 5.3% remains quite low. See for yourself….
Here’s what this means for you:
For buyers: Most buyers purchase a home based on their desired monthly payment. As interest rates increase, a buyer’s desired monthly payment gradually loses purchase power.
For sellers: as interest rates increase, the number of buyers in your eligible “buyer pool” will steadily decrease because, and this might go without saying, there are fewer buyers who can afford $2,500/mo than can afford $2,000/mo.
For seller/buyers: for sellers who plan to also purchase a replacement property, it’s important to remember that while your home is appreciating in value, so are the homes you’re planning to purchase.
Each client’s situation is unique, so it’s important for us to discuss a customized plan with each buyer and seller.
Prediction #2: Roughly 50,000 homes will be bought/sold across the Denver metro during 2019
As home prices have climbed, it’s not uncommon to hear statements like, “There aren’t any homes to buy!”
That’s sort of true, and sort of not. Here are the statistics for the 7 county Denver metro:
While there certainly are fewer homes listed for sale each year now than there were during the recession, all this means is that almost every home that’s listed for sale actually sells. It is this supply and demand that is driving up home prices - leaving many first time buyers feeling like there are no affordable homes for sale. As long as the population continues to increase in the Denver metro at a rate that outpaces builders' capacity to build new homes (and we don’t get surprised by a flood of foreclosures), we’ll continue to have an inventory shortage.
Here’s what this means for you:
For buyers: We’re not expecting prices to start going down anytime soon - so if you’re waiting for the market to go back down, you’re likely going to be waiting for a while - a loooong while.
For sellers: While selling a home might feel like it will be easy and automatic in our current market, as you read down to prediction #3, you’ll understand the value of timing the sale of your home in order to maximize the potential profits from your sale.
Prediction #3: Home prices will jump up early and rapidly this year
Let’s talk about shopping on Black Friday for a moment. You know how people start lining up outside Target or Best Buy at 5:00 PM on Thanksgiving Day? That’s sort of what December/January is like for home buyers — and March is when stores open at 5:00 AM.
Wait for it…wait for it…IT’S SPRING TIME LET’S GO BUY A HOUSE!!!!!
Add climbing interest rates to the normal seasonal spike in buyer activity, and we’ve likely got a real wild ride on our hands this spring.
We saw this happen very clearly in 2018, and it shifted the normal market timing forward by about 30 days - causing an early jumpstart to increased demand (and prices) and a sooner-than-normal market slowdown in mid-summer.
For the nerds, here’s a graph:
Two key points here:
1. In 2018, you’ll notice from the baby blue column that homes were selling on average at 100% of list price in February before topping out in April/May. Contrast that with the market five years prior in 2013 when the market topped out a full 60 days later in June with homes selling, on average, for just under 100% of list price. Buyers are definitely hitting the market sooner and sooner each year to beat the rush, and we expect more of the same in 2019.
2. The first red circle highlights the time of year when a seller has the BEST chances of selling their home - almost every single home that’s listed (dark blue line) goes under contract (intersecting yellow line) and closes (evidenced by the red line stats seen during May-June).
Here’s what this means:
For buyers: We’re heading into what we expect will be a fast-paced spring. Sellers are anxious to sell and competition between buyers will be stiff. Let’s schedule a consultation ASAP to be prepared.
For sellers: While homes sell year round, March/April are the sweet spot for sellers who hope to receive multiple offers and want to maximize their sale.
Sellers generally need about 30 days to have their home ready to sell (process includes consultation, staging, cleaning, photos, pre-marketing, etc.), so let’s talk NOW if you have questions about selling during 2019.
We’re here to help you!!!! We live this stuff everyday and are happy to talk with you about a plan and timeline for your home buying/selling needs. We regularly meet with people up to one or two years in advance just to begin the conversation.
Schedule your free, high trust, low pressure consultation today and let’s get started!!!!
Josh & Kevin
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