Monica’s Monthly Minute- Denver Real Estate Market

Happy Spring! If you are new to my monthly minute, WELCOME!
My goal with this newsletter is to provide you timely updates on the Denver Metro Real Estate Market that are applicable to you and your real estate interests. If you have any questions or feedback, please don’t hesitate to send me a message.
I look forward to hearing from you.
Monica
Real Estate News
March 2019 Video
Are we headed for a Market Crash?
CLICK HERE to find out from
the building perspective
Real Estate News
Welcome to Spring! As much as Coloradans love our Rocky Mountains covered in snow, Spring is always a welcome reprieve from the Winter. When the warm sun finally comes out to play, so too do the buyers and sellers.
An increase in spring activity is very typical, but what stands out this year is the interesting dynamics of the rental sector. I predict that the rental market will stay strong in 2019.
Why?
When Denver rental vacancy is below 6%, the market experiences rent growth. In 4Q18, Denver’s vacancy rate was just below this threshold at 5.8 percent. Denver is poised in just the right place to have another strong performance in the rental market.
What makes this year different is that Denver is projected to break a previous record set in 2017 for number of new apartment developments. Developers are planning to complete about 17,000 apartments in 2019 alone, crushing the record of 13,348 new apartments we saw in 2017. The actual number of new apartments finished will probably be closer to 13,500, given the inevitable limits on new construction. Still, this outperforms both 2017 and 2018 numbers.
It may seem oddly ambitious that developers are attempting to exceed Denver’s new apartment build numbers while our market is in the midst of experiencing a slowdown, but this actually makes perfect sense if you take a moment to think about the numbers.
  1. It takes about four years to build a new development (two years to plan and permit, and another two to complete construction). The new developments hitting the market now were planned well before the start of the slowdown. Thankfully, they were not planned in vain.
  2. The population of metro Denver increases about 1.5% per year and will continue to do so for years to come. Patti Silverstein, a well-known demographer in Colorado, believes the population of metro Denver will rise from 3.05 million in 2016 to 3.5 million in 2025. All of these people have to live somewhere!
  3. Thanks to a strong labor market and rising wages, the majority of people migrating into Colorado are highly educated Millennials with higher incomes. These Millennials tend to gravitate towards denser urban neighborhoods, close to the action of city life. Also gravitating towards urban neighborhoods are a surprising amount of Baby Boomers, who perhaps see value in leasing rather than dealing with yard work or home maintenance.
  4. Millions of others, especially young people, saw their friends and relatives lose their homes during the recession and swore to never buy a house. These are a lot of the same people who have been renting the past seven years instead of buying, making the rental market historically strong.
These are just a few of the many reasons demand for rentals remains strong. If you are interested in becoming an investor, now is a great time to do so. The rental markets are likely to remain attractive for a long time. Give me a call and let’s talk about what investments might be right for YOU.
Sellers
You have likely heard that we are experiencing a “slow down” in our market. How will that affect you and the sale of your home?
Since spring 2015 the market has been super hot. If homes were priced accurately, they would sell in a weekend with 5-10 offers and usually over the list price. The market is still hot, but not as overheated. Homes that are priced right and show well will still sell within a week, but now with one or two offers instead of 10 and without as many over bids. Depending on the neighborhood and price point, sometimes homes last longer on the market.
It is still possible to sell your home for a good strong price, is is just becoming more important to make sure it is prepared to sell and priced accurately.
As an analogy, over the past few years we have been driving 100 miles per hour in a 55 speed limit zone. Now this “slow down” is around 70 miles per hour in the same 55 MPH zone. It’s still a market in favor of sellers and still moving fast, but just not as crazy fast as before.
If you are considering moving, Spring is the best time of the year to get the most buyers looking at your home. You will want an accurate Comparative Market Analysis on your home to interpret its value and identify small projects that can increase its marketability. It is also a good time to start looking for your next home to get a sense of what is out there and where you might want to move. Call me and I will be happy to help get you started!
Buyers
While the market is not as insanely hot as the previous four years, it is still competitive, especially for the good listings.
As a buyer it is important to write a strong offer in order for your offer to be selected when in a competitive situation. You need to work with an agent who understands how to write a powerful offer that will be seriously considered. Here are some of the ways to do this.
  1. Get pre–qualified by a competent loan officer before writing any offers. You can invite the seller to contact the mortgage person who can demonstrate what a strong buyer you are.
  2. If the seller needs time to move, write an offer with a 30-60 day rent-back period. This permits the seller to stay in the home after closing to give them time to find a replacement home.
  3. Provide a large earnest money deposit to show the seller you are serious. A good agent will never lose the earnest money you put up so you will still be safe, but the seller will be more likely to accept your offer.
  4. Write an escalation clause into your contract that says your offer will beat any other verifiable offer by, say $2,000.
And these are just a few of the strategies we use to get our offers accepted. Feel free to call me to discuss how we can get YOUR offer accepted to get you into the home you love!
Thank you so much for all of your support and referrals. For 2018, Maria and I were once again in the ranks of Top Producers of Your Castle Real Estate.
We couldn’t do it without you! Thank you!
Monica Perez
303-912-3320
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