By setting a new record after the other in both the resale market and the growing pending recent home sales, the Denver real estate market is unstoppable. But the alarming rise in Coronavirus cases coupled with economic disruptions continues to challenge the staying power of the recovering property market in Denver and throughout the country.
During the recent Realtors Conference & Expo, the National Association of Realtors (NAR) went on record to state that a second national lockdown would be very detrimental to the economy. We would have to deal with another possible recession.
The national housing market experienced a steady increase in existing home sales for the fifth consecutive time in October to an average yearly rate of 6.85 million homesthroughout the U.S., accounting for a 26.6% year-over-year median sale increase. The NAR termed this rising rate as one of the strongest since 2005.
Due to inventory shortages, Denver’s home sales only increased by 16.3% because homebuyers didn’t have enough options in the market last month. The number of home listings available for purchase by the end of October dropped by 44% over the previous year. The median home price for a standard single-family property sold for $519,900. According to the Denver Metro Association of Realtors’ (DMAR) report, this was a 14.3% year-over-year rise in the local real estate costs.
One Money Magazine report highlighted that due to the rigid bidding wars and a shrinking inventory, homebuyers are desperately using tricks like scouring divorce records and obituaries in their home hunting strategies for potential listings.
Besides showing vital market recovery signs, the Denver housing market is still uncertain, and the possibility of having a second wave of job cuts is raising many concerns. Because of the current economic strain, property experts and economistsrely on a quick election resolution, the additional fiscal stimulus package, and a trusted vaccine for a full recovery.
An extra fiscal stimulus package is highly uncertain. Besides having several trial vaccines emerging, it would take a long time to forestall the record-breaking hospitalization cases. These are all pointers of a double-dip recession that might completely crush the housing market.
Other factors include the expiring forbearance agreements that gave borrowers the option of skipping mortgage payments for up to a year during the pandemic. Buyers will now have to start paying while making up for the missed payments, while those who will have a hard time honoring the agreement will face a tough predicament when it expires.
They will be forced to sell their mortgages. But at least time has changed, and this struggling lot can rest easy now knowing that they won’t be trading in a glutted market where property value doesn’t match what is owed.
The Denver housing market currently has less than 1-month inventory for the highly preferred single-family apartments. Given the high selling pace right now, most homebuyers are quick to take up any distressed home that shows up.
Real estate stakeholders are vigilantly preparing for changes that the Biden administration might have for the housing market. One of his campaign proposals was to make housing more accessible by giving first-time homebuyers an advance tax credit of $15,000.
But analysts believe that the proposal to remove the 1031 Exchanges would be turbulent for the industry. This elimination would significantly constrain the market by hurting the supply of new homes.
The pandemic resulted in record-low mortgage interest rates that increased affordability and caused a surge in demand. The subsequent shortage in supply led to a sharp spike in home prices while filling the gap.
Considering this trend, housing experts now cautions that a slight increase in interest rates would be riskier for the market as it would put off potential homebuyers and bring down home prices. This spike can be caused by a lack of confidence from bond investors due to unlimited federal borrowing coupled with a sudden jump in inflation.
It is usual for an external shock to cause shifts in the economy and, in turn, disrupt traditional patterns and market trends. Thisroughly translates to”disruptions in one market causes paradigm shifts that createopportunities in a different one.”
One shift that housing market analysts are keeping an eye on is the move away from large. Denver is listed to continue benefiting from this shift thanks to its more substantial staying power due to the pandemic.
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