The economists have weighed in, and it certainly looks like 2019 is shaping up to be the best year for a while where you’ll get the opportunity to really sell your house for the cash price you want. In fact, they’re estimating a bit of a downturn in late 2019 and 2020. Plus, they think by 2021 that housing values will have plummeted and if you’re going to get out of the real estate market and sit out the storm, now would be the time. This is based on a couple of different factors that are leading people to look toward the horizon for market volatility barreling down the highway at us. Check it out.
Home Price Growth Is Already Slowing
When you get on Zillow, the almighty home price database that realtors of all kinds like to pull up and cherry pick results for you to justify a price that makes their 20% a bit more cushy, you’ll find the most home prices that you first get haven’t been on for more than 30 days. But, that’s due to Zillow’s algorithm which shows the newest and most popular properties to you first. If you do a bit of digging, you’ll find multiple homes that have been on for over 60 days and have to drop their price points several times. That’s because realtors and developers have been inflating real estate prices in Northern Colorado because they knew they could get away with it. Before late 2018, they had several factors on their side:
- New buyers were still entering the market
- Interest rates were crazy low
- There were lots of new jobs and not a lot of living arrangement options
However, that’s not quite the case anymore.
Interest Rate and New Buyers Are Changing Course
This is, by no means, an unexpected turn of events. Economists have been anticipating a 2019 downturn since 2017 when the population jump started regulating and the pot craze surrounding Northern Colorado’s popularity started to really lose that sense of novelty. This prediction is being fulfilled as the interest rates on mortgages have started to rise in earnest now and buyers are becoming more hesitant to make an offer or pursue a mortgage. That will explain the drop in buyer attention that we’ve been seeing as well as the lingering quality of those houses that are listed at the top range of most of the prices around town. Home prices are climbing steadily toward $400K, instead of the Fort Collins average of $200K that held for around 15 years previously.
That being said, the housing inventory has managed to remain impressively low. There is, recently, no shortage of first time home buyers as Millennials start to get into that age that favors starting a family and earning financial stability. That being said, with apartment buildings popping up like weeds all over, it’s unlikely that Millenial home buyers will be unwilling to wait for housing prices to drop while they pay for a posh living environment with granite countertops and hardwood flooring in a pretty little high rise building near downtown.
Interest Rates Are Volatile
In November 2018, the interest rate on a 30-year fixed rate reached its highest level in over seven years. They were at around 4.94%, and while they’ve dropped a bit since then (down to 4.35%) the threat has been noted. While it’s unlikely that mortgage rates will jump to the 18% they saw in 1981, they’re not looking quite as inviting as they were before. When you take a really good look at what the real estate experts expect to happen on a nationwide level, we’re looking at a recession in 2020 if not the beginnings of one in 2019.
There’s really nothing on the horizon that looks like it will spike incoming potential homeowners. The weed craze has died off, it’s getting legalized in multiple states including California which is where most of the new Colorado residents are from. Another hard winter, economic downturn that’s very familiar in the western areas won’t be so comfortable for folks from the coast. You could assume that there might be a bit of a mass exodus from Colorado as things start to look down, which will only exacerbate the symptoms of the original issue: an overheated economy with no driver at the wheel.
What Do We Recommend?
With the housing market being weird right now, mainly in the sense that many houses on the market are very overpriced or undesirable, the odd mortgage rate fluctuations and more of the factors that indicate which way the wind is blowing, we’d caution that, while you can put your home on the market, you might not find much luck in selling it. That’s especially true if the inspector catches a peek at any serious repairs that the home needs before hitting the market in earnest or if you have an actual timeline you need to keep in mind like an estate in probate, liquidating assets for a divorce or relocating for a new job. In that case, we can always point you in one savvy direction:
When you have a limited amount of time to suffer the whims of the market there’s really only one way to go. Choose cold, hard cash over indecision when you choose Colorado All Cash. We help people get out of bad real estate investments all the time. Whether they’re trying to recover from an almost-foreclosure, a house stuck in probate or something similar, whatever it is, we’re here to help. Reach out to us today to start getting your balanced all cash quote on your unwanted property so you no longer have to worry about the real estate market’s unsteady health.