More are able to afford a down payment
Spring is in full bloom and the housing market is heating up. If you’re one of the many Denver area residents who is interested in purchasing a new or existing home, take a look at Denver’s Real Estate Market report card. It’s good news! 69% of households can afford to purchase with only 5% down – the second highest level since 2005. While we have more folks able to purchase, that’s only part of the equation. Let’s take a look at some of the other factors.
Where Denver’s real estate market is headed
When looking at Denver’s report card (below), it’s important to know that over time most markets revert back to their average or mean performance, which is a “C.” Another very important indicator to notice is which way the market is trending. A market that is trending higher is a positive indicator. In many cases, a “B” market trending higher may be better than an “A-” market trending lower. What does the current report card mean for Denver? When looking at our 1 year appreciation rate score, you’ll see we’re performing at an A level and trending upwards. This means over the next year it’s likely that home values will continue to appreciate, probably outpacing the national average of 5.54%. That’s great news if you’re selling. If you’re buying that means you’re better off buying sooner rather the later as the home you are looking at today could quickly increase in value.
Resale volume is graded at a “C” and is trending upward as well. This is likely because current inventory is very low (approximately a one month supply) however, we are just at the beginning of the purchase season and should start to see more resale homes come onto the market. New construction continues to be a viable alternative to a resale purchase with a grade of a “B.”
Impact of job growth
Another factor that can have a significant impact on the strength of the housing market is the health of the job market. Denver’s year-over-year change shows a gain of approximately 56,200 jobs from February of 2014 through February of this year. Patty Silverstein, chief economist for the Metro Denver EDC forecasts job growth in 2015 to be 3 percent, which represents the addition of about 45,000 jobs. Metro Denver’s employment growth in 2014 was 3.2 percent, which was more than 1.3 percentage points higher than the national average. According to Silverstein, natural resources & construction (one of four super sectors of our regional economy) should post 5 percent growth.
It’s your turn…
What trends are you seeing in your neighborhood? Send a quick comment, we’d love to hear from you!