Market professionals claim that 2018 is likely to push the Denver Metro real estate market to a more modest level. Leveling out is likely.
Patty Silverstein, a chief economist with Development Research Partners in Littleton, claims the Denver Metro market is expected to stay steady at a 5% average increase. This is the average that is currently being observed throughout the rest of the nation.
Despite this leveling out, the home prices are expected to continue to rise – even faster the inflation rate. In recent years, the Denver real estate market had a price index of 15.5%, significantly higher than the nation’s average rate. It moved people to buy.
“If you don’t own a home, buy one. If you own a home, buy another one. If you own two homes, buy a third. And, lend your relatives the money to buy a home….” – John Paulson
According to Zillow, there are numerous imbalances – in terms of mixed home types that are currently available to individuals interested in residing within the region. In terms of price distribution, approximately 60% of all available on the real estate market are considered to be in the bracket of the top third of the most expensive and approximately 15% of all homes that are available are considered to be in the bracket of the least expensive homes.
Supply and Demand
Despite these averages, the demand for inexpensive homes still expands further than the availability of such homes. Based on the appreciation rate of 9.5%, real estate managers and property managers are expecting the greatest differences in the market to occur between the most expensive of residences and the areas that are considered to be most affordable to the average American.
The true difference that will most positively impact the real estate market is the new tax code that will be emerging this year.
Tax Reform
The 2018 tax reform bill will aid in adding higher levels of disposable income to consumers; however, it will reduce the number of breaks that have been previously in place for individuals that elect to purchase more expensive residences.
In the past, consumers have depended heavily upon these law-specific reductions in order to purchase higher-end structures. On average, though, only a small 14% of homes will have such a high value that consumers may take advantage of the interest deductions associated with mortgages. Previous tax codes would have made 44% available for these deductions, previously.
Interest Rates
In years past, interest rates were low. They’ve recently been on a gradual rise.This issue is even more enhanced by the fact that homes are low in supply, yet high in demand. The good news is, with all of the rates taken into consideration, it is believed that construction rates will increase and those desired homes will be made available throughout 2018.
Resources:
https://www.denverpost.com/2017/12/31/metro-denver-housing-market-forecast-2018/
https://www.thedenverchannel.com/lifestyle/real-estate/zillow-predicts-more-housing-shortages-in-2018-will-that-hold-true-in-denver
https://www.sammamishmortgage.com/denver-forecast-average-growth/
