Norada Real Estate Investments

About Marco Santarelli

Marco Santarelli is an investor, author, Inc. 5000 entrepreneur, and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property.  His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom with real estate.  He’s also the host of the top-rated podcast – Passive Real Estate Investing.

Washington State Housing Market Forecast 2022 & 2023

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According to Redfin, Washington home prices were up 5.1% year-over-year in July. The number of homes sold fell 31.3% and the number of homes for sale rose 20.4% as compared to last year. The median price of homes in Washington was $608,700. There were 9,617 homes sold in July this year, down from 14,000 homes sold in July last year. The median days on the market was 12 days, up 3 days year over year.

The number of newly listed homes was 13,309 and down 14.3% year over year. The average month of supply is 2 months, up 1 year over year. 37.7% of homes in Washington sold below list price, down 24.8 points year over year. There were only 45.1% of homes that had price drops, up from 23.0% of homes in July last year. There was a 100.3% sale-to-list price, down 4.3 points year over year.

Washington State Housing Market Forecast

According to Zillow, the typical value of homes in Washington is $624,275. This value is seasonally adjusted and only includes the middle price tier of homes. Washington home prices have increased by 18.2% over the past year and 44.5% over the last two years. Here's Zillow's forecast for some of the metro areas in Washington.

None of these MSAs of Washington is predicted to see a home price decline in 2023. Rising home values and listing prices, combined with limited inventory, indicate that Washington's housing market is tilted toward sellers. This trend will likely continue for the foreseeable future unless inventory grows faster than demand or rising interest rates ultimately dampens the demand to that extent.

Seattle, WA home values are forecasted to rise 3.1% between July 2022 to July 2023.
Spokane, WA home values are forecasted to rise 6.2% between July 2022 to July 2023.
Kennewick, WA home values are forecasted to rise 5.2% between July 2022 to July 2023.
Olympia, WA home values are forecasted to rise 7.2% between July 2022 to July 2023.
Bremerton, WA home values are forecasted to rise 3.3% between July 2022 to July 2023.
Yakima, WA home values are forecasted to rise 4.9% between July 2022 to July 2023.
Bellingham, WA home values are forecasted to rise 6.7% between July 2022 to July 2023.
Mount Vernon, WA home values are forecasted to rise 3.1% between July 2022 to July 2023.
Wenatchee, WA home values are forecasted to rise 5.1% between July 2022 to July 2023.
Longview, WA home values are forecasted to rise 5.7% between July 2022 to July 2023.

Washington Real Estate Appreciation Rate

According to Neighborhoodscout, Washington's median home value is around $512,020. The real estate appreciation rate in Washington in the latest quarter (2021 Q4 – 2022 Q1) was 4.45%. In the last twelve months, it has been 22.81%. In the last two years, it has been around 34.77% while the cumulative appreciation rate in the last decade has been around 237.81%. Orondo, Hunters, Lummi Island, Waitsburg, and Bellingham are among the Top ten highest appreciating cities in Washington since 2000.

Washington State Housing Market Forecast
Source: Neighborhoodscout

Will the Housing Market Crash in Washington?

There is undoubtedly a slowdown in the pace of home sales in the Washington housing market, but it is more of a return to normalcy. This is neither a crash nor a bubble; housing demand is still present. The slowdown is ideal for buyers who are weary of being outbid in a hot Washington real estate market or who are experiencing buyer fatigue.

All-Transactions FHFA House Price Index for Washington (Quarterly)

  • Q2 2022: 824.10
  • Q1 2022: 778.33
  • Q4 2021: 753.47
  • Q3 2021: 733.67
  • Q2 2021: 691.43
Washington Housing Market
Source: FRED

Factors That May Influence the Washington Housing Market Outlook

A rise in job growth and a decrease in the unemployment rate are two factors that contribute to a housing market boom. Both of these factors interact to cause the boom. It is impossible to break the link that exists between the economy and the housing market. The purchasing power of those considering purchasing a home is affected by both the strength of the economy and the amount of job creation.

In 2021, the real Gross Domestic Product (GDP) of Washington increased by 6.7 percent compared to the previous year. The state's real GDP experienced the most growth in 2018 when the GDP grew by 6.8 percent when compared to the previous year. The information industry added 122.12 billion chained 2012 U.S. dollars of value to the state GDP. The leading publicly traded company with headquarters in Washington was a technology company, Amazon.com. That year, Amazon.com topped the list with a revenue of about 386.06 billion U.S. dollars.

Several notable billionaires, including Jeff Bezos, former Chairman & CEO of Amazon, and Bill Gates, technology advisor and former Chairman & CEO of Microsoft, live in the state. Significant amounts of trade with Asia pass through the ports of Puget Sound. Washington is the fourth largest exporting state in the United States, after New York, California, and Texas. The ports of Washington handle 8% of all American exports and receive 6% of the nation's imports.

The state's 39,500 farms produce, ship, and grow 300 different crops, ranking second in the country. Food and beverage production employs 164,000 people in Washington State, which is the nation's leading producer of apples, sweet cherries, pears, raspberries, and hops. Over the last 10 years, Washington’s tech sector employment has grown by nearly 34%. Tech workers make up 10.7% of the state’s total workforce. The state leads the nation in the net percentage of new tech positions, with a gain of 7.6% last year.

In Washington, housing growth has remained a strong predictor of population growth. Despite strong housing growth, most cities and towns had high occupancy rates. The state added 46,500 housing units this year, 100 more than the previous year. This year, 58% of new units built were multifamily. Over the last two years, one of the state's five largest metropolitan counties has received more than 71% of all new housing units. With 17,100 new housing units, King County leads all counties and accounts for 37% of the state's total housing growth this year.

Population growth, particularly household growth, leads to an increase in housing demand. In the long run, population decline may lead to a decrease in housing demand. Washington tops 7.8 million residents in 2022. Washington's population grew by 158,100 people since the 2020 decennial census on April 1, 2020, largely due to migration. This means Washington grew to an estimated 7,864,400 people as of April 1, according to annual estimates that the Office of Financial Management prepared.

Migration continues to be the primary driver behind Washington’s population growth. From 2021 to 2022, net migration (people moving in minus people moving out) to Washington totaled 83,300. This is up by 40,500 from last year. Net migration accounted for 86% of the state’s population growth.

Home prices are directly affected by demand, which, according to real estate experts, isn't going away anytime soon. However, they are not rising as quickly as they once did, and Washington real estate agents predict that prices will level off or rise slightly this year. Some of this is most likely due to rising interest rates.

Moderate price appreciation has historically been accompanied by a six-month supply. Construction has slowed for much of the pandemic, owing to labor shortages and supply-chain issues that have made certain materials difficult to obtain. Washington's housing supply is still well short of a balanced real estate market.

Housing Inventory: Active Listing Count in Washington

Washington State Housing Supply
Source: FRED

Sources:

  • https://fred.stlouisfed.org/series/WASTHPI#
  • https://www.zillow.com/wa/home-values/
  • https://www.neighborhoodscout.com/wa/real-estate
  • https://fred.stlouisfed.org/series/ACTLISCOUWA#
  • https://www.redfin.com/city/13296/NE/Washington/housing-market
  • https://www.statista.com/statistics/306793/washington-gdp-growth/
  • https://en.wikipedia.org/wiki/Economy_of_Washington_(state)
  • http://choosewashingtonstate.com/why-washington/our-key-sectors/ict/
  • https://ofm.wa.gov/about/news/2022/06/washington-tops-78-million-residents-2022

Colorado Housing Market Predictions 2022 & 2023

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The Colorado housing market is slowing down in 2022. Houses for sale lasted somewhat longer in June than in May. June saw fewer house sales compared to the previous month and June of last year. However, sellers continue to list additional homes for sale, as if they are worried buyers will vanish. The good thing for the Colorado housing market is that home prices are not going down in 2022 and 2023.

The average home price in Colorado is $694,989. Not only the Denver metro area but the entire Colorado housing market is a hotspot to buy and sell real estate. Due to the surge in demand for homes, home prices have increased in most regions throughout the state. It has increased the difficulty of finding a home to call your home.

There are more buyers than there are houses, resulting in a seller's market that continues to drive prices up. According to the Colorado Association of Realtors, the median Colorado single-family home price topped $500k for the first time in April of last year and has now reached $580,000.

  • In July 2022, the median price in the Colorado housing market (statewide) was $580,000, up +10.5% year-over-year.
  • The Average Sales Price in Colorado was $694,989, up 7.1% year-over-year.
  • Percent of List Price Received has dropped to 100.1%.
  • Days on Market Until Sale = 25, up +13.6%.
  • Closed sales of single-family homes were down by 29.7% from last year.
  • Months supply was up 53.8% to 2.0 months, which is still a seller's market.
  • Inventory of Active Listings increased by 42.5% year-over-year.
  • New Listings decreased by 8.1% year-over-year, which shows a slight decrease in seller optimism in July 2022.

Even Colorado Springs is in the strongest seller's market that we have ever seen. Low inventory and ever-soaring prices continue to impact affordability. In August 2022, the median list price of homes in Colorado Springs, CO was $465K, trending up 12% year-over-year, according to Realtor.com. The median sale price was $472.5K. Homes in Colorado Springs, CO sold for approximately the asking price on average. The sale-to-List Price Ratio was 99.71%. On average, homes in Colorado Springs, CO sell after 48 days on the market. The trend for median days on market in Colorado Springs, CO has gone up since last month, and slightly up since last year.

Colorado Housing Market Predictions 2022 and 2023

Colorado is still a seller's real estate market with a positive price forecast for the next twelve months. The market remains anything but average. Despite the increase in the number of properties for sale this year, there is still a lack of homes on the Colorado housing market. Thus, current conditions continue to favor sellers because there are too few homes available for the number of buyers in the market, which gives them all the leverage.

In that situation, buyers will do what they can to compete for the limited number of homes for sale, and prices will rise. The median price in the Colorado housing market (statewide) in July 2022 was $580,000, an increase of 10.5 percent year on year. At the same time, the average home price was $694,989, an increase of 7.1 percent year on year.

Colorado has a track record of being one of the best long-term real estate investments in the U.S. Let us look at the home price appreciation trends recorded by Zillow over the past few years. Colorado's strong economy gives buyers the ability to spend more on housing, consequently increasing real estate prices.

Since the last decade (Sept 2012), Colorado home values have appreciated by nearly 152.7% — Zillow Home Value Index. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in the Colorado metro is currently $586,317. It indicates that 50 percent of all housing stock in the area is worth more than $586,317 and 50 percent is worth less (adjusting for seasonal fluctuations).

In July 2021, the typical value of homes in Colorado was around $497,000. Home values have gone up 17.8% since then. Colorado is currently the seller's real estate market which means that demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. There are fewer homes for sale than there are active buyers in the marketplace.

Colorado Housing Market Predictions
Source: Zillow

Here's Zillow's forecast for some of the metro areas in Colorado. Rising home values and listing prices, combined with limited inventory, indicate that Colorado's housing market is tilted toward sellers. This trend will likely continue for the foreseeable future unless inventory grows faster than demand or rising interest rates ultimately dampens the demand to that extent. None of these MSAs of Colorado except for Boulder are predicted to see a home price decline in 2023. In Boulder, home prices may see a slight drop of 0.3% in 2023.

Denver, CO home values are forecasted to rise 1.2% between July 2022 to July 2023.
Colorado Springs, CO home values are forecasted to rise 4.5% between July 2022 to July 2023.
Fort Collins, CO home values are forecasted to rise 1.1% between July 2022 to July 2023.
Boulder, CO home values are forecasted to decline 0.3% between July 2022 to July 2023.
Greeley, CO home values are forecasted to rise 1.9% between July 2022 to July 2023.
Pueblo, CO home values are forecasted to rise 6.3% between July 2022 to July 2023.
Grand Junction, CO home values are forecasted to rise 4.2% between July 2022 to July 2023.

What's Next for the Colorado Housing Market?

Housing market forecasters predict that home prices will keep rising in Colorado. As a buyer, the longer you wait to purchase a property, the more it will cost you due to continuing home price rise. It also provides you piece of mind that your home's worth will likely increase after you purchase it. This makes it historically a wise investment and an effective inflation hedge. As a seller, price appreciation is great news for your home's worth. Again, rely on a professional to determine the optimal circumstances for selling your home and purchasing your new home.

The number of available homes for sale is expected to increase in Colorado. As a buyer, having more housing inventory for sale on the market is excellent news. Remember that the housing supply is still limited, so be prepared to act quickly and make your best offer. If you're a home seller, you should prepare for more competition as more homeowners enter the housing market.

Inflationary pressures will likely continue to influence mortgage rates. As a buyer, you should consult real estate professionals, including your lender, to discover how rising mortgage rates affect your purchasing power. If you are prepared, it may make sense to purchase now before the price increases. As a seller, rising mortgage rates motivate some homeowners to move up as quickly as possible.

In August 2022, the median sales price in Northern Colorado was $550,000 while the weeks of inventory were 9. The median sales price in Central Colorado was $634,900 while the weeks of inventory were 16, according to the stats released by REcolorado.

Northern Colorado Housing Market Trends

  • Homes Sold = 562
  • Median Closed Price = $550,000
  • New Listings = 792
  • Pending Listings = 658
  • Weeks of Inventory = 9
  • Median Days in MLS = 10

Central Colorado Housing Market Trends

  • Homes Sold = 49
  • Median Closed Price = $634,900
  • New Listings = 57
  • Pending Listings = 50
  • Weeks of Inventory = 16
  • Median Days in MLS = 22

Home prices are directly affected by demand, which, according to real estate experts, isn't going away anytime soon. However, they are not rising as quickly as they once did, and Colorado real estate agents predict that prices will level off or rise slightly this year. Some of this is most likely due to rising interest rates.

Moderate price appreciation has historically been accompanied by a six-month supply. Construction has slowed for much of the pandemic, owing to labor shortages and supply-chain issues that have made certain materials difficult to obtain. Colorado's housing supply is still well short of a balanced real estate market.

Housing Inventory: Active Listing Count in Colorado

Colorado Housing Market Supply
Source: FRED

References:

  • https://www.zillow.com/co/home-values/
  • https://www.recolorado.com/buy-sell/market-trends/
  • https://fred.stlouisfed.org/series/ACTLISCOUCO#
  • https://coloradorealtors.com/market-trends/regional-and-statewide-statistics/

Denver Housing Market: Prices, Trends, Forecast 2022-2023

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Is the Housing Market Slowing in Denver?

Is the Denver housing market moving in favor of buyers in 2022? As the Denver Metro Housing Market continues to evolve, this blog will keep you up-to-date. The market stats for August indicate that the Denver housing market is no longer in flux. The real estate market has become more balanced, according to DMAR.

The Denver housing market is cooling as interest rates rise. Home prices will either remain stable or fall. As economic uncertainty keeps some buyers at home, the market is becoming more balanced. All significant statistical indicators point to a market slowdown in the Denver area. Since this time last year, MLS days have increased by 120 percent, and the close-price-to-list-price ratio has fallen below 100 percent for the first time since July 2020, to 99.41 percent.

The median sales price fell 2.54 percent from the previous month. Although this is also a seasonality trend in the Denver Metro market interest rates continue to have the greatest impact on buyer demand. The median sales price in the Denver metropolitan area is up 8.49 percent year-to-date. This results in a gain of equity for the average homeowner of $49.233.51. New listings decreased by 15.50 percent annually.

Due to the likelihood that their current interest rate is significantly lower than what they could obtain if they purchased, sellers are no longer incentivized to move. Homes continue to receive multiple offers, but there are fewer of them. Multiple offers thousands of dollars above list price have vanished, and homes are taking longer to sell despite continued low inventory.

The average new listing in August went under contract in 19 days, up from 13 in July and 10 in June. “Every major statistical category points to the market slowing,” says Andrew Abrams, chairman of the DMAR Market Trends Committee. Closings fell 5.9% in August compared to July, and 30.2% compared to the previous year. Active listings were also down 7.4% from July to the end of August. In August, sellers listed 3,694 single-family homes, down from 4,300 in August 2021. The figure also fell from 4,556 in July to 5,675 in June.

<<<READ: Colorado housing market forecast & trends>>>

According to DMAR's Luxury Market Report (properties sold for $1 million or greater), it also felt the seasonal cooling in August. The new listings in August were down 18.77 percent month-over-month for detached homes and 18.31 percent for attached. August sales volume was $658,551,398, down 19.29% from July and 16.80% year-over-year. Year-to-date luxury sales are $6,717,616,956, up 17.21 percent year-over-year, showing a hot first half of 2022 and a slowing second half.

This market category has increased fast since 2020; year-to-date sales in 2020 were $2,822,161,140, up 138.03 percent. The months of inventory for attached and detached homes in this market segment remained unchanged from July, at 2.39 months for detached homes and 3.40 months for attached homes, respectively, being within the typical seller's market range. Compared to the spring market, however, this is a more even playing field and an opportunity for buyers.

Are Denver Home Prices Dropping in 2022?

Denver Housing Market's Quarterly House Price Appreciation: The FHFA House Price Index (FHFA HPI®) is an indicator of typical house price inflation in the United States. It is a broad measure of the movement of single-family house prices at various geographic levels. It indicates that home prices increased by 21.6 percent in the Denver-Aurora-Lakewood Metropolitan Statistical Area over the past year. Prices also rose 7.5 percent over the last quarter (as of 2022 Q1).

As of September 23, 2022, the average rent for a 1-bedroom apartment in Denver, CO is $1,699. This is a 3% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Denver increased by 1% to $1,488. The average rent for a 1-bedroom apartment decreased by -1% to $1,699, and the average rent for a 2-bedroom apartment decreased by -5% to $2,280.

  • The average rent for a two-bedroom apartment in Denver is $2,280, a 9 percent rise over the previous year.
  • The average rent for a three-bedroom apartment in Denver is $2,800, a 5 percent rise over the previous year.
  • The average rent for a four-bedroom apartment in Denver is $3,090, a 3 percent rise over the previous year.

The Denver Metro Association of REALTORS® (DMAR) published its August Market Trends Report which demonstrated that the home price rise last month represents the highest August on record. Based on the sustained demand for housing and lack of inventory, the market is projected to see price appreciation over the next twelve months. Denver's real estate market continues to decline from its high, the market will operate in a more balanced way than it did at the beginning of the year.

Metropolitan Statistical Area (MSA) reports show housing market statistics that focus on the Denver metro region with a relatively high population density at its core and close economic ties throughout the area. It includes Greater Denver Metro Area Counties: Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park. Here are the numbers for July 2022 compared with July 2021.

Median Home Price Denver 2022

  • (Residential) $579,900 represents the highest August on record. The previous record was 2021 at $534,500.
  • (Detached) $645,000 represents the highest August on record. The previous record was 2021 at $580,000
  • (Attached) $400,000 represents the highest August on record. The previous record was 2021 at $371,000.

Average Home Price Denver 2022

  • (Residential) $657,284 represents the highest August on record. The previous record high was 2021 at $615,521.
  • (Detached) $744,589 represents the highest August on record. The previous record high was 2021 at $688,708
  • (Attached) $456,013 represents the highest August on record. The previous record high was 2021 at $439,896.
Denver Real Estate Market
Data by DMAR. Forecast from multiple sources.

Denver Market Trends Showing Month-Over-Month %Change

Denver housing market trends
Source: DMAR

Denver Housing Market Forecast 2022 and 2023

The Denver real estate market predictions for 2022 & 2023. Interest rates remained low and buyer demand remained consistently high throughout 2021. According to DMAR, more homes were purchased last year, totaling 63,684, than in any previous year. While demand was at an all-time high, new listings on the market fell 5.26 percent throughout the year.

At the start of January 2022, the Denver Metro area had only 1,477 active properties on the market, which is 11,175 fewer than normal. Due to sustained demand for housing and a lack of inventory, the market is expected to experience double-digit appreciation in 2022. It will be the first time since 2015-2016 and 1998-2000 when Denver saw back-to-back years of double-digit appreciation.

Denver has a track record of being one of the best long-term real estate investments in the U.S. Let us look at the home price appreciation trends recorded by Zillow over the past few years. Denver's strong economy gives buyers the ability to spend more on housing, consequently increasing real estate prices.

Home values rose so much over the past six or seven years that affordability became an issue for a person earning the median income in this area. But in 2019, it experienced a cooling trend where home values appreciated by a mere 1%. The year ended with an average home price of $486,695 and a median of $420,000. This was up less than three percent from 2018, but up almost 90 percent from 2010.

Since the last decade (September 2012), the Denver-Aurora-Lakewood Metro home values have appreciated by nearly 160% — Zillow Home Value Index. The typical home value of homes in the Denver metro is currently $629,632. It indicates that 50 percent of all housing stock in the area is worth more than $629,632 and 50 percent is worth less (adjusting for seasonal fluctuations).

In Aug 2021, the typical value of homes in Denver City was around $553,000. Home values have gone up 13.7% since then. Denver is currently a moderate seller's real estate market.

Similar growth has been recorded by NeighborhoodScout.com as their data also shows that in the past 10 years Denver real estate appreciated by nearly 146.94%. This amounts to an annual real estate appreciation of 9.46%, which puts Denver in the top 10% nationally for real estate appreciation.

Here is the latest housing forecast for the Denver MSA. Denver could become a buyer’s market by mid-2023. It is now a neutral market with prices getting softer. The second half of the year is seeing a return to normalization. Higher interest rates are already translating to more inventory, lower or flat prices, and longer days in the MLS.

  • Denver-Aurora-Lakewood Metro home values have gone up 13.7% over the past year.
  • Zillow forecasts that Denver home values are expected to rise by 0.5% between August 2022 to August 2023.
  • Denver home values have gone up 13.8% over the past year.
  • Aurora home values have gone up 13.9% over the past year.
  • Lakewood home values have gone up 11.9% over the past year.
  • The typical value of homes in Colorado (statewide) is currently holding at $580,275.
  • Colorado home values have gone up 14.7% over the past year and will continue to rise in the next twelve months.
Denver housing market predictions
Credits: Zillow.com

In conclusion, we can say that these numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? Denver Metro Area is still a seller’s market across the board but the historically low mortgage interest rates did help buyers as far as housing affordability is concerned.

In a balanced real estate market, it would take about six months for the supply to dwindle to zero. In terms of months of supply, Denver can become a buyer's real estate market if the supply increases to more than six months of inventory. Months Supply of Inventory in the metro Denver housing market is still low as compared to a glut of buyers. However, it is shifting towards a more balanced housing market in 2022 & 2023.

Nationally, the houisng market is also cooling off from its pandemic-induced peak. The National Association of Realtors says home sales fell in June 2022, the fifth consecutive month of declining sales volumes. And while the national median home price in June hit $416,000 — yet another record — the pace of annual appreciation decelerated to 13 percent

Is Denver a Good Place to Invest in Real Estate in 2022?

Should you consider Denver real estate investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2022 and 2023. Denver is ranked as the country's 16th-most walkable city, with 600,158 residents. It has some public transportation and is very bikeable. Downtown is the most walkable neighborhood in Denver with a Walk Score of 93.

As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached are the most common housing units in Denver. Other types of housing that are prevalent in Denver include large apartment complexes, duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 40-45% of Denver's housing units.

Denver ranked 13th for overall real estate investment and development, according to some 3,000 industry professionals surveyed and interviewed by the Urban Land Institute and PwC. Survey respondents viewed Denver's housing market even more favorably, collectively ranking it ninth overall.

Of greater importance to real estate investors in Denver is that the area is growing in population. The jobs are increasing and so are the number of renters. It is the largest and capital city of Colorado, home to roughly 700,000 people. The Denver metropolitan area is home to around 2.7 million people. The population has increased by 1.33% from 2019. The Denver-Aurora, Colorado statistical area is home to about three and a half million people.

It has a low unemployment rate of 3% unchanged from 3.30 last month and down from 6.70% one year ago, according to the U.S. Bureau of Labor Statistics. A third of the population of the Denver metro area rents. All these are excellent signs of investors looking to buy a rental property in Denver. Despite the recent cooling off, there are several reasons to consider a long-term investment in the Denver real estate market.

Shortage of housing for a growing population, a strong economy & increasing jobs have been fueling the demand in the Denver housing market for the past many years. Denver is a key trade point for the country, and home to several large corporations in the central United States. It was named 6th on Forbes Magazine’s “Best Places for Business and Careers.” Denver South is home to 7 Fortune 500 companies. It is also home to mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy.

Let’s take a look at the number of positive things going on in the Denver real estate market which can help investors who are keen to buy an investment property in this city. We’ll address the biggest factor pulling people to the Denver housing market next.

How Was the Housing Market in Denver Last Year?

Two numbers stood out most: low inventory and skyrocketing prices. The lack of supply, combined with strong demand, drove record price gains. In 2021, the Denver metro averaged $612,274, a 16.68 percent gain over 2020. Prices reached a new all-time high and represented the tenth consecutive year of upward growth. The previous high point for percentage growth occurred in 2000 when it reached 15.77 percent. Those that followed the median price rise saw a 16.67 percent increase in 2021, nearly equal to the change in the average closed price.

Months of inventory (or MOD) is another strong indicator of market direction because it takes both active and closed listings into account. MOI was 0.56 on an annual average basis in 2021. A new record low, surpassing 2020's MOI of 1.21. 2012 was the last year in which Denver averaged greater than 2.0 MOI. The traditional period of four to five months is no longer adequate in light of current trends. As we settle into the new normal, the present market is heavily skewed in favor of the house seller.

Based on the market's sustained demand for housing and a lack of inventory, the market is expected to appreciate by double digits in 2022, which it hasn't seen in back-to-back years since 2015-2016 and 1998-2000. According to DMAR, there are a few elements that will determine if house prices continue to accelerate. The first consideration is supply and demand. At the start of January 2022, there are 41.87 percent fewer residences on the market than there were in January 2021.

The second aspect is that conforming loan ceilings in the Denver metro area increased to $684,250. This is $37,050 more than the applicable national conforming limits. This indicates that the majority of purchasers may acquire a $750,000 property with a 10% down payment without incurring a large loan. However, forecasts for the next year are divided between those who believe that already high prices and rising mortgage rates will price many buyers out of the market and those who believe that limited supply will fuel another year of double-digit price growth.

The median price of a single-family home sold in December was $599,900, which was flat with November's median price and represents a 19.34% increase from last December. The average closing price was $705,753, a 0.25 percent increase from November and a 15.61 percent increase from the previous year. The attached and detached segments both had close-price-to-list-price ratio averages of 101.24 and 101.66 percent respectively. A high list-to-sell ratio indicates a healthy real estate market in which buyers and sellers negotiate less over the sales price.

A third of the Denver metro area rents. Since housing inventory is scarce, prices are going up much faster than wages, and the younger population is more comfortable renting than owning, the Denver housing market is seeing a rapid rise in its rental market. The sheer demand for housing stock is making it profitable to break up large homes into multiple apartments.

Denver remains more expensive than other Colorado cities, including Fort Collins and Colorado Springs, and other major metro areas such as Phoenix and Charlotte, but considerably below California-based rent leaders and more. If Forbes could recommend this as a Denver real estate market investment strategy in 2016, it can be seriously considered today.

They said that any single-family home in the Denver housing market could be considered a good rental property due to the rapid rise in home prices. Denver Has A Large Student Population For Rental Homes. The college market presents a unique opportunity for landlords. There is a constant stream of people who will only rent unless they choose to stay after graduation. They may rent a while longer before feeling secure enough to buy a house.

Buying investment real estate in a college town is high risk. After all, when a college like Evergreen State scares off students or simply fails to attract them like many classics, private liberal arts schools that found themselves rendered redundant after brand name schools opened their doors, there’s less demand for the rental of the house as a permanent residence.

You don’t have that problem in Denver since there are so many colleges in the Denver area. Schools range from the massive community college network to the 400-student Bel-Rea Institute of Animal Technology. American Sentinel University in Aurora is home to 2600 students, while the Metropolitan State College of Denver has more than 20,000 students.

The Colorado School of Healing Arts has only 100 students, while Colorado Christian University has more than 7000. Yes, the Denver real estate market for those who want to cater to students is diverse. You could invest in rental real estate near any of these colleges, knowing you could rent or sell to people that simply want to live in the area if student demand slacks off.

Denver Rent Prices Are Going Up

Dense urban areas are seeing weaker rental prices and drops in average rents, while some suburban sunbelt areas project small increases in rents. The main reason is working people relocating to less expensive and less dense areas. The August 2022 Rent Report from Apartment List reveals that Denver rents increased over the past month.

Denver rents have increased 0.8% over the past month, and are up sharply by 8.8% in comparison to the same time last year. Currently, median rents in Denver stand at $1,443 for a one-bedroom apartment and $1,785 for a two-bedroom. This is the sixth straight month that the city has seen rent increases after a decline in January. Denver's year-over-year rent growth lags the state average of 10.0%, as well as the national average of 12.3%.

Throughout the past year, rent increases have been occurring not just in the city of Denver, but across the entire metro. Of the largest 10 cities that we have data for in the Denver metro, all of them have seen prices rise. Here's a look at how rents compare across some of the largest cities in the metro.

  • Englewood has seen the fastest rent growth in the metro, with a year-over-year increase of 13.8%.
  • The median two-bedroom there costs $1,827, while one-bedrooms go for $1,186.
  • Parker has the most expensive rents of the largest cities in the Denver metro, with a two-bedroom median of $2,235; rents increased 1.3% over the past month and 10.6% over the past year.
  • Aurora has the least expensive rents in the Denver metro, with a two-bedroom median of $1,695; rents grew 0.8% over the past month and 11.8% over the past year.

Compared to most other large cities across the country, Denver is less affordable for renters.

  • Rents increased sharply in other cities across the state, with Colorado as a whole logging rent growth of 10.0% over the past year.
  • For example, rents have grown by 12.8% in Fort Collins and 7.0% in Colorado Springs.
  • Denver's median two-bedroom rent of $1,785 is above the national average of $1,358.
  • Nationwide, rents have grown by 12.3% over the past year compared to the 8.8% rise in Denver.
  • While Denver's rents rose sharply over the past year, many cities nationwide also saw increases, including San Diego (+17.6%), Charlotte (+17.2%), and Austin (+14.6%).
  • Renters will generally find more expensive prices in Denver than most other large cities.
  • For example, Charlotte has a median 2BR rent of $1,496.

The “Zumper Denver Metro Area Report” analyzed active listings last month across 17 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Colorado one bedroom median rent was $1,514 last month. Westminster and Broomfield ranked as the most expensive cities with one bedrooms priced at $1,840 whereas Laramie was the most affordable city with one bedrooms priced at $780.

The best place to buy rental property is about finding growing markets. Cities like Longmont & Lakewood are good for investors looking to get started with rental property ownership at an affordable price. These trends provide a macro look at the growing rental demand. Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present their own opportunities for investors.

These cities look good for rental property investment this year as rents are growing over there.

The Fastest Growing Cities For Rents in the Denver Metro Area (Y/Y%)

  • Littleton had the fastest growing rent, up 27.2% since this time last year.
  • Fort Collins saw rent climb 23.3%, making it second.
  • Longmont ranked as third with rent increasing 19.5%.

The Fastest Growing Cities For Rents in the Denver Metro Area (M/M%)

  • Loveland had the largest monthly growth rate, up 6.3%.
  • Boulder rent climbed 6.1% last month, making it the second fastest growing.
  • Littleton & Fort Collins were third with rents both increasing 5.8%.
Denver rent prices 2022
Source: Zumper

Denver Is Relatively Landlord-Friendly

Colorado is relatively landlord-friendly; compare it to the West coast, and it is a landlord’s dream. You don’t have to give tenants notice that you’re entering a property. You can quickly begin evictions if they haven’t paid the rent. That protects your investment in the Denver housing market. There’s no limit on late fees.

There are no state laws that prevent you from rekeying the locks after evicting them. If they violate the lease, give them formal notice. The tenants then have 72 hours to correct the issue or move out. If they don’t comply with notices, then you can go to court. If the court agrees with you, the sheriff gives the tenants 48 hours to move out before forcing them out.

Denver's Limited Room to Grow Keeps Housing Supply Tight

Many of the fastest-growing markets in the US are along the Front Range, a part of the Southern Rocky Mountains. While there are houses in the hills, it is a lot harder to build on the mountainous landscape than on flat plains. In Denver’s case, the massive national forests and Rocky Mountain Park to the west of Denver and its suburbs prevent the expansion of the Denver housing market in that direction. This keeps home prices higher than they’d be in places like Dallas.

The residential median home price in Denver hovers around $530K. That’s a steal for the migrants from California, but the sheer numbers of them coming in is pricing locals out of the housing market. The median monthly rent here – and that includes one-bedroom apartments – is around $1100 a month. Note that you could get much more for a spacious single-family home for rent or a large condo. With a 3 bedroom detached single-family home, you could receive well over $2000 per month in rent. You’ll find strong ROI numbers for the Denver real estate market.

Denver's Quality of Life

We can joke about the people who moved to Colorado decades ago, inspired by the movie “Rocky Mountain High”. We’re not going to joke about the over-hyped medical marijuana industry there today. U.S. News & World Report published its list of the “150 Best Places to Live in the U.S.,” and four of the top five cities are right here in Colorado: Boulder (1), Denver (2), Colorado Springs (4), and Fort Collins (5). Denver was the second-best city to live on that list.

The area was a little lower on value than many like, but it ranked high on jobs, quality of life, and desirability. It is a beautiful city to live near the mountains – located on the western edge of the exquisitely beautiful High Plains. It is exactly one mile high above sea level and has the largest city park system in the nation, with 14,000 acres of mountain parks and 2,500 acres of natural areas.

That isn’t enough on its own to draw huge numbers of people to the Denver real estate market, but it is a factor. It has become the 19th-most populous city in the nation. The metro area population of Denver (as of 2020) is 2,827,000, a 1.33% increase from 2019 (Macrotrends.net).

Denver was ranked as a Beta world city by the Globalization and World Cities Research Network. It has been one of the fastest-growing major cities in the United States, and real estate investments provide a direct way to participate in the strong growth of these economies. The strength of the overall economy significantly impacts the real estate market.

Denver's Strong Economy & Jobs Boost Its Housing Market

Job growth directly affects the real estate market. Demand for all types of real estate increases with the number of local jobs, as during periods of economic development or boom. Jobs are a major reason why people move to Denver in the first place. Denver’s unemployment rate has been well below the national average for years.

In June 2022, Denver MSA had unemployment rate was 3.3%, lower than the national average of 3.7%. Over the past 25 months, Colorado has added 410,300 nonfarm payroll jobs, compared to losses totaling 374,500 in March and April 2020. That translates to a job recovery rate of 109.6 percent, which exceeds the U.S. rate of 96.3 percent.

Forbes ranked Denver as the number one Best Place for Business and Careers in 2015. Additionally, the magazine placed Denver 16th for employment growth and 20th for education. When one considers the huge oil and government sectors, as well as the rapidly expanding aerospace and technology businesses, it's no surprise that Denver is seeing such a big job boom.

The National Renewable Energy Laboratory contracts for research and development while companies such as Halliburton profit from a profitable oil play. Aerospace and technology positions are available at Ball Aerospace, Raytheon, and Lockheed-Martin, whilst software engineers are in demand at Rocket Software, StorageTek, and Sun Microsystems.

That explains why Denver is one of the top cities for in-migration, attracting people from all over the state as well as the country. Due to its proximity to the mineral-rich Rocky Mountains, Denver has long been a home for mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy. The top 25 employers in Metro Denver include government and municipal organizations, and corporations.

Denver Technological Center, better known as The Denver Tech Center or DTC, is a business and economic trading center located in Colorado in the southeastern portion of the Denver Metropolitan Area, within portions of the cities of Denver and Greenwood Village. It is home to several major businesses and corporations.

The U.S. Government is the largest employer in Metro Denver. The Department of the Interior includes such agencies as the Bureau of Land Management, Office of Surface Mining and Reclamation, and Bureau of Reclamation, and all have offices in or near the Denver Metro area. Another top employer in the Denver Metro Area is the State of Colorado.

It employs nearly 30,000 people in the Denver Metro area. As the capital and largest city in the state, Denver hosts the State of Colorado in multiple locations. Centura Health is one of the top 25 employers in the metro Denver area. Its massive health care network includes 15 hospitals, eight affiliate hospitals, health neighborhoods, health at home, urgent care centers, emergency centers, mountain clinics, 100 plus physician practices, and clinics and Flight for Life Colorado.

Denver is well known for its proximity to the Rockies. Other attractions in the area include but are not limited to the Denver Zoo and the Denver Botanic Gardens. Many of those 30 million tourists would love to have rented a house or apartment for their visit instead of a hotel. Then there’s the business traveler. Denver hosts around 80 conventions a year, too.

Whether someone is staying for a week for a convention or working a contract job in the tourism industry, this drives demand for short-term rentals that can be incredibly profitable. Renting on sites like Airbnb is legal if you have a business license, though around half of the Airbnb rentals are thought to be violating that rule. Denver is particularly progressive with allowing people to rent out their homes and apartments on Airbnb, though landlords may not agree with it.

Known Areas of Redevelopment

You don’t want to invest in the Denver housing market and end up losing money because the neighborhood is going downhill. Conversely, areas slated for redevelopment will almost certainly go up. And Denver has known and planned for areas of redevelopment. Downtown Denver saw multiple infill projects downtown ten years ago. Redevelopment is planned around Elitch Gardens today.

Key trade point for the country – Denver is home to several large corporations in the central United States. Denver South is home to 7 Fortune 500 companies. Denver was named 6th on Forbes Magazine’s “Best Places for Business and Careers.” Home for mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy.

Denver's Demographic Momentum

At first glance, the average age of 36 for residents versus 40 for the national average doesn’t sound too promising. However, this long-established city has already been noted as a great place to retire. That pulls the average age up. The coolness factor and job market attract equal numbers of young adults. That is why Millennials make up about 22% of Denver’s population. And given the job market and quality of life, they’ll probably stay here to raise families, generating more demand for the Denver housing market.

Generation X made that decision, too, which is why roughly a quarter of residents are under the age of 20. Additions to the local labor force tend to drive rents and prices up on properties in the vicinity and result in the local construction of homes and apartments. That will propel the Denver real estate market for decades to come.

Denver Colorado Real Estate Investment Markets

Investing in Denver's real estate can be a worthy investment due to a steady rate of appreciation. There are many reasons why the Denver real estate market is going strong today and is certain to remain strong for years to come. You cannot afford to miss out on this growing and appreciating real estate market. Good cash flow from Denver investment properties means the investment is, needless to say, profitable.

On the other hand, a bad cash flow means you won’t have money on hand to repay your debt. Therefore, finding a good Denver real estate investment opportunity would be key to your success. Even as Denver home prices have reached new heights, the market remains attractive to residential real estate investors in the $300,000 to $399,000 price range. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain.

The homebuyers won’t be able to outbid real estate investors and would end up renting. The high prices combined with the lack of higher gains have slowed down fixing and flipping investment properties in Denver. The best investment is now looking for a rental property that will generate good cash flow. Your best tenants would be the retirees who intend to relocate to Denver and want to purchase property to rent out. The three most important factors when buying real estate anywhere are location, location, and location.

The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Denver investment property and you should be able to flip it for a lump sum profit. The neighborhoods in Denver must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls.

Some of the popular neighborhoods for buying a house or an investment property in Denver are Jefferson Park, Berkeley, Park Hill, Cheesman Park, Congress Park, Hilltop, Sunnyside, Capitol Hill, Highland, Platte Park, Stapleton, Reunion, Cherry Creek, Aspen, and Washington Park.

Denver housing prices are not only among the most expensive in Colorado but they are also some of the most expensive in all of the United States. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods. As with any real estate purchase, act wisely. Evaluate the specifics of the Denver housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Denver.

The inventory is low, but opportunities are there. According to Realtor.com, there are 69 neighborhoods in Denver, where properties are available for sale. If you think of investing in Denver, you have decided on a long-term investment property. Here are the ten neighborhoods in Denver having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

  1. Victory Crossing
  2. Stapleton
  3. Stapleton South
  4. Stapleton East
  5. Stapleton North
  6. Stapleton Southeast
  7. CBD
  8. Ballpark
  9. City Center
  10. W 14th Ave / Quitman St

Colorado Springs is another sizzling hot market for real estate investment in 2020. The Colorado Springs real estate market contains several large populations of renters, many practical reasons for people to move here from the surrounding area and across the country, and long-term factors that will drive growth for years to come. Forget the Mile High City and invest in the Colorado Springs real estate market.

Aurora is a fairly large city on the east side of Denver. Its proximity to Denver has long kept it in the realm of the Denver suburb. The Aurora real estate market 2020 is seeing rising prices & rents. Aurora, Colorado is more than a growing suburb. It is a large, thriving city in its own right. It has a bright future, and it is poised for rapid appreciation and increasing rental rates. This is a good time to invest in the Aurora real estate market.

Boulder real estate market is another good place to buy investment properties. Boulder is located in northern Colorado. The Boulder metro area is becoming a high-tech hub, driving up rental rates and property values. Others are lured here by the promise of high-paying jobs or attending school somewhere they can intern at Big Tech firms without paying a fortune. Boulder’s economy is stabilized by the presence of government research institutes and the proximity to Denver’s buzzing economy.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Denver, Colorado.

Consult with one of the investment counselors who can help build you a custom portfolio of Denver turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Denver. Not just limited to Denver or Colorado but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Denver turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Let us know which real estate markets in the United States you consider best for real estate investing! 

This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the material is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. This post educated investors on Denver real estate. Buying a rental property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.

REFERENCES

Market Data, Reports & Forecasts
https://www.recolorado.com
https://www.dmarealtors.com
https://www.zillow.com/denver-co/home-values
https://www.littlebighomes.com/real-estate-denver.html
https://www.recolorado.com/market-statistics/market-watch.aspx
https://www.realtor.com/realestateandhomes-search/Denver_CO/overview
https://www.zumper.com/blog/rental-price-data/
https://www.zumper.com/blog/denver-metro-report/

Best Neighborhoods for real estate
https://www.neighborhoodscout.com/co/denver/real-estate

Foreclosures
https://www.realtytrac.com/statsandtrends/co/denver-county/denver

Quality of life, Unemployment, Rent, Tourism
https://realestate.usnews.com/places/colorado/denver
https://denverrelocationguide.com/largest-employers-in-denver
https://www.mashvisor.com/blog/why-where-invest-denver-real-estate
https://www.denverpost.com/2014/12/16/denver-experiencing-its-best-convention-year-ever

Landlord friendly
http://www.landlordstation.com/blog/top-landlord-friendly-states
https://www.avail.co/education/laws/colorado-landlord-tenant-law

Short term rentals
https://crej.com/news/airbnb-31-billion-gorilla-room
https://businessden.com/2018/08/27/50-of-airbnb-landlords-ignore-denver-rules-taxes-in-booming-100m-industry

Growing rental market
https://www.5280.com/2017/04/everything-know-denvers-real-estate-market-wrong
https://www.forbes.com/sites/ingowinzer/2016/07/31/should-you-invest-in-denver-area-real-estate/#16f926277fc5

Redevelopment
https://denverinfill.com/home-old.htm
https://www.denverpost.com/2018/03/06/river-mile-denver-elitch-gardens-redevelopment/

Colleges
https://www.collegesimply.com/colleges-near/colorado/denver

Is it a Good Time to Buy a House or Should I Wait Until 2023-2024

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Should I Buy a House Now or Wait?

Check out the latest housing trends for the previous month if you're unsure whether it is a good time to buy a house or if should you wait until 2023. It’s becoming harder to buy a house as prices are up year over year, and mortgage rates are soaring in 2022. At the same time, consumer prices on everything are also on the rise making it even more difficult to save money to buy a house next year.

In an effort to tamp down inflation, the Federal Reserve is raising interest rates. The Fed hiked interest rates by three-quarters of a percentage point, following a similarly aggressive rate hike in June which was already weighing on housing, business investment, and consumer demand. The Fed has raised interest rates in less than four months which it took three years to do the previous time.

The cumulative effect of these sharp rate increases has cooled the housing market and caused the economy to slow, but has done little to lower inflation. Although Fed doesn't control mortgage rates it has a ripple effect on the mortgage industry. The recent rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing. On the flip side, higher interest rates also mean savers will earn more money on their deposits.

Don’t expect much relief in the form of lower rates in the coming months. Therefore, it certainly does not seem to be a good time to buy a house as rates have risen much more rapidly in 2022 than most industry analysts and economists had initially predicted. But when it comes to the possibility of significant savings, looking for the best mortgage offer provides an outstanding return on investment. Because it only takes a little more effort to browse around for the greatest mortgage rate, why not take advantage of it?

<<< Will the Housing Market Crash? >>>

Is it a Good Time to Buy a House or Should I Wait?

As of October 4, 2022, the average rate for the benchmark 30-year fixed mortgage is 6.85 percent (source: Bankrate). It is an increase of 13 basis points from a week ago. At the current average rate, you’ll pay a combined $654.59 in principal and interest for every $100,000 you borrow to buy a house. That’s up $15.93 from what it would have been last week.

The average 15-year fixed mortgage rate is 6.07 percent, up 21 basis points over the last week. At that rate, monthly payments on a 15-year fixed mortgage will be around $600 per $100,000 borrowed to buy a house. The larger monthly payment may be harder to fit into your budget than a 30-year mortgage payment, but it has huge advantages: You'll save several thousand dollars in interest and create equity much faster.

Let's compare the figures between now and eight months ago when the buyers financed their houses with a mortgage. On a $300,000 loan, a 30-year, fixed-rate mortgage at December’s rate of 3.11% would have meant a monthly payment of about $1,282 (Principal & interest).

  • Loan amount = $300,000
  • Total interest paid = $161,923
  • Total cost of loan = $461,923

Today’s rate of 6.85% brings the monthly payment to $1,965 (Principal & interest). That’s an extra $683 a month or $8,196 more a year and $246,398 more over the lifetime of the loan.

  • Loan amount = $300,000
  • Total interest paid = $408,321
  • Total cost of loan = $708,321

The Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group revised downward its forecast for total home sales growth through 2023. They now project 2022 total year existing sales to decline 16.5 percent from 2021, followed by a further decline of 13.3 percent in 2023.

Their forecast for 2022 purchase volumes remains at $1.7 trillion, essentially unchanged from last month. The group now expects purchase volumes to fall about 1.5 percent in 2023 to just under $1.7 trillion, a downward revision of $17 billion from last month’s forecast, driven by downward revisions to their forecast for home sales.

The rise in rates is having the Fed’s desired effect on housing, as house price growth began to slow in June. They expect the slowdown in housing to continue through 2023 as affordability constraints mount for potential homebuyers, and considering, too, that refinance activity has been significantly curtailed by the rise in mortgage rates. The group continues to anticipate a strong deceleration in home price growth going forward due to the lagged effects of higher mortgage rates and the slowing economy weighing on purchase demand.

If the economy suffers a downturn, mortgage interest rates will very probably fall to about 4% or even lower. If it does, this could be a good time to put off buying a home and save some money, especially for first-time buyers. Fannie Mae forecasted at the start of the year that the average 30-year fixed mortgage rate will rise from 3.1% to 3.3% by the end of 2022.

The Mortgage Bankers Association was somewhat more optimistic about mortgage rates, projecting that the average rate will increase to 4% by the end of 2022. It is now evident that neither Fannie Mae's nor the Mortgage Bankers Association's predictions were even somewhat accurate.

The 30-year fixed mortgage rate, which hovered at 3% throughout 2021, is treading close to 7 percent, a steep increase from last year. It has almost doubled since last year. Some experts are forecasting that the 30-year, fixed-mortgage rate will vary from 5% to 7% by the end of 2022. According to Nadia Evangelou, director of Forecasting for the National Association of Realtors, rates may exceed 6 percent. They did momentarily before the Federal Reserve's June announcement of a rate rise, but have subsequently backed off.

The most likely scenario is that the Fed will continue to raise the fed funds rate to combat inflation and will continue to reduce its position in the market for mortgage-backed securities. The Federal Reserve is expected to continue its course of raising short-term interest rates and anticipate an additional 75 basis point hike at its September meeting, though markets are partially pricing in the possibility of a full 100 basis point increase.

As a buyer, you do not want to hear this because higher interest rates make home loans less affordable. Rising rates make homes more expensive for buyers, and, for prospective borrowers, steeper monthly mortgage payments. It will thereby reduce the demand for home purchases. The latest housing stats for August already point to an increasing inventory amidst moderating demand.

The mortgage credit availability again decreased in August as investors reduced their offerings of ARM and non-QM loan programs. With the overall origination volume expected to shrink in 2022, some lenders continue to streamline their operations by dropping certain loan programs to simplify their offerings, according to the Mortgage Bankers Association.

The MCAI fell by 0.5 percent to 108.3 in August. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI decreased by 1.0 percent, while the Government MCAI remained essentially unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.7 percent, and the Conforming MCAI fell by 1.2 percent.

The competition for housing results in fewer options, higher prices, and faster sales. In a seller's housing market, there are more interested buyers than available homes and that makes it a difficult time to buy a house, especially for first-time buyers. According to the NAR, the national median price for existing homes sold in August was $389,500, up 7.7% from the same month in 2021.

This is the longest streak of year-over-year growth ever recorded, spanning 126 months. However, it was the second month in a row that the median sales price retracted after reaching a record high of $413,800 in June, the usual seasonal trend of prices declining after peaking in the early summer.

Fannie Mae released a nationwide housing survey for August 2022 that reveals only 27 percent of respondents believe it is a good time to buy a house in 2022.

“The share of consumers expecting home prices to go down over the next year increased substantially in August. Accompanying this, HPSI respondents reported a significant decrease in home-selling sentiment,” said Doug Duncan, Fannie Mae Senior Vice President, and Chief Economist.

The Home Purchase Sentiment Index® (HPSI) decreased 0.8 points in August to 62.0, its sixth consecutive monthly decline, as high home prices and elevated mortgage rates continue to weigh on consumer sentiment, particularly home-selling sentiment. Month over month, consumers reported that home-selling conditions have worsened – although that component remains strongly positive on the net. Consumers also reported that homebuying conditions have improved, but 73% continue to report that it’s a “bad time to buy a house in 2022.”

Meanwhile, a greater share reported the expectation that mortgage rates will decline, even though a majority continue to believe that mortgage rates will go up over the next 12 months. Year over year, the full index is down 13.7 points.

Is 2022 a Good Time to Buy a House?

The percentage of respondents who say it is a good time to buy a home increased from 17% to 22%, while the percentage who say it is a bad time to buy decreased from 76% to 73%. As a result, the net share of those who say it is a good time to buy increased 8 percentage points month over month.

Is 2022 a Good Time to Sell a House?

The percentage of respondents who say it is a good time to sell a home decreased from 67% to 59%, while the percentage who say it’s a bad time to sell increased from 27% to 35%. As a result, the net share of those who say it is a good time to sell decreased 16 percentage points month over month.

Home Price & Mortgage Rate Expectations

The percentage of respondents who say home prices will go up in the next 12 months decreased from 39% to 33%, while the percentage who say home prices will go down increased from 30% to 33%. The share who think home prices will stay the same increased from 26% to 28%. As a result, the net share of Americans who say home prices will go up decreased 9 percentage points month over month.

The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 6% to 11%, while the percentage who expect mortgage rates to go up decreased from 67% to 61%. The share who think mortgage rates will stay the same increased from 21% to 25%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 11 percentage points month over month.

Is It a Good Time to Buy a House or Wait Until 2023?
Source: Fannie Mae

The HPSI is constructed from answers to six of 100 national housing survey questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions.

Is it a Good Time to Buy a House for First-Time Buyers?

According to a recent Fannie Mae survey, many consumers are hesitant to buy a home in 2022. About 67% of survey respondents expect mortgage rates to increase, and there are rising concerns about job stability and escalating housing prices. Some homebuyers will find the current market conditions easier, while others will find them more difficult to buy a house. The current upward trend in home prices is likely to continue throughout the year, which could price out some prospective buyers.

However, it is anticipated that prices will rise at a slower rate than they did in 2021. The current lack of entry-level supply and the rapid increase in mortgage rates appear to be negatively impacting potential first-time homebuyers in particular, as evidenced by the larger proportion of younger respondents (aged 18 to 34 years old) who believe it is a bad time to buy a house. The advantage of the historically low mortgage rate environment of the previous year appears to have diminished for first-time homebuyers, and affordability is projected to become an even greater constraint for them in the future.

In August 2022, the first-time buyers were responsible for 29% of sales, consistent with July 2022 and August 2021. According to NAR, the annual share of first-time buyers was 34% in 2021. Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in August, up from 14% in July and 15% in August 2021.

In 2022, rising mortgage rates are piling onto record-breaking home prices, locking even more potential buyers out of the red-hot housing market. Historically, rising interest rates cause more prospective buyers to delay purchases, and the recent increase in financing terms has already resulted in a decline in mortgage applications.

The prices are not going down in 2022. The various forecasts from experts show that 2022 will remain a moderate sellers' housing market, and home values may still increase by single-digit percentage points. While affordability concerns continue to grow, low mortgage rates, increased savings, and a strengthening job market all contribute to making homeownership more accessible to a wide number of prospective buyers.

Realtor.com’s September 2022 data shows that the housing market is continuing to moderate. Homes are selling more slowly than they did a year ago, house inventory growth has stalled, and listing price rise is moderating. However, homes are still selling faster than they were before the pandemic, and the price rise remains in double digits. This year, the last week of September was the greatest time to purchase a home, and while sellers are putting their homes on hold, buyers may anticipate less competition and somewhat lower pricing this fall.

In September, newly listed homes declined by 9.8% compared to the same time last year, a lower rate of decline compared to last month’s 13.0% year-over-year decrease, but far shy of levels seen earlier this year. In August, seller sentiment continued to decline. Fannie Mae’s Home Purchase Sentiment Index (HPSI) revealed that the net share of respondents saying now is a good time to sell decreased by 16 percentage points compared to the previous month and by 30 percentage points compared to last year.

Nationally, the inventory of homes actively for sale on a typical day in September increased by 26.9% over the past year. This amounted to 155,000 more homes actively for sale on a typical day in September compared to the previous year. The growth rate of inventory remained stable compared to last month’s growth rate of 26.9%.

  • In September 2022, the nationwide median listing price for active listings was $427,000, an increase of 13.9 percent year over year.
  • It was a deceleration from last month’s growth rate of 15.4% and down from a peak growth rate of 18.2% in June.
  • The share of homes having their price reduced grew from 11.0% last September to 19.5% this year.
  • In large metros, median listing prices grew by 10.2% compared to last year, on average.
  • Nationally, the typical home spent 50 days, 7 days more than last year but 18 days less than typical pre-pandemic levels.
  • The national inventory of active listings increased by 26.9% over last year.
  • The total inventory of unsold homes, including pending listings, increased by just 0.7% year-over-year due to a decline in pending inventory (-23.7%).
  • Sellers are less active than last year, as newly listed homes declined by 9.8% on a year-over-year basis.

Housing Markets that saw the largest year-over-year increase in listing prices in September 2022:

  • Miami, where the median listing price grew by +28.3%
  • Memphis, where the median listing price grew by +27.3%
  • Milwaukee, where the median listing price grew by +27%

Housing Markets that saw the greatest increase in their share of price reductions compared to last year:

  • Phoenix (+32.3 percentage points)
  • Austin (+27.4 percentage points)
  • Las Vegas (+20.0 percentage points)

Western metros saw the greatest increase in the share of price reductions (+15.6 percentage points), followed by southern metros (+10.7 percentage points).

Conclusion: The Best Time To Buy A Home Depends On You

Higher interest rates pose a challenge to existing homeowners looking to buy a new home at the same time as selling their current home. Existing homeowners may benefit from lower interest rates than those offered right now because they already have mortgages. Their monthly expenses could rise dramatically as a result of the purchase of a new property.

In other words, if you don't have a specific date in mind for when you want to buy a new property, you may be better off waiting till it does. Every potential buyer's best time to buy a property is different, and the greatest time to buy a house is not the same for everyone. It’s essential to consider your financial situation and understand how buying will impact your bottom line each month.

Sources:

  • https://www.realtor.com/research/june-2022-data/
  • https://www.bankrate.com/mortgages/todays-rates/
  • https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
  • https://www.bankrate.com/mortgages/will-mortgage-rates-go-up-in-july-2022/
  • https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey
  • https://www.mba.org/news-and-research/research-and-economics/single-family-research/mortgage-credit-availability-index-x241340

Long Island Real Estate Market Forecast 2022 & 2023

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Different regions of the United States are categorized as “overvalued,” “undervalued,” or “normal” according to a study conducted by Fortune. The home price increase is vastly surpassing income growth everywhere. Specifically, in downstate New York, Suffolk, Nassau, and Westchester counties have been identified as “overvalued,” according to the research.

Other upstate counties likewise received this distinction, although the markets in the remainder of the state have stayed substantially intact. Fortune found that roughly 68 percent of metropolitan housing markets are “overvalued,” an increase from prior research, while 24.5 percents are “normal” and 7.6 percent are “undervalued.” These findings are based on data from CoreLogic, which examined hundreds of metropolitan housing markets.

According to the report, “overvalued” markets have experienced an increase in mortgage rates, which is affecting new and existing house sales, as well as mortgage applications, which are seeing a precipitous decrease. Meanwhile, CoreLogic now says only 24.5% of U.S. housing markets are “normal” and just 7.6% are “undervalued.” CoreLogic predicts that home prices throughout the nation will continue to grow over the next year, with the exception of four cities, including Bridgeport, where there is a “very high” possibility that home prices would decline.

Will Prices Drop in Long Island Housing Market in 2023?

The home prices will likely decline in Westchester and Long Island as they are overvalued housing markets. As a result of the present housing bubble, homes in some areas of downstate New York are deemed “overvalued.” A separate report from Moody's Analytics is more pessimistic. The report says that 96% of the nation's 392 biggest housing markets are “overvalued” relative to local salaries.

This contains 149 home markets that are at least 25% “overvalued.” In the future, Zandi anticipates the annual growth rate of U.S. housing prices will collapse from 20 percent to 0%. Moreover, he anticipates house price declines of 5 to 10 percent over the next year in the most “overvalued” property markets in the United States.

These regional housing markets are the most likely to see home prices decline: Boise; Colorado Springs, Colo.; Las Vegas; Coeur d’Alene, Idaho; Tampa; Atlanta; Fort Collins, Colo; Sherman, Texas; Jacksonville; Idaho Falls, Idaho; Lakeland, Fla.; Greeley, Colo.; Longview, Wash.; Charleston, S.C.; Albany, N.Y.; Denver; Clarksville, Tenn.; Greensboro, N.C.; Charlotte.

Long Island Housing Market Trends 2022

Numerous prospective purchasers were deterred from entering the Long Island housing market in 2021 as a result of the pandemic-era increase in home prices, mounting job insecurity fears, and rising mortgage rates. The housing market saw intense bidding wars and selling prices over the asking price, following the highest yearly increase in 45 years.

Lack of supply was a major contributor to the price increase in Long Island housing market. Buyers snapped up properties at an unprecedented rate, creating a highly competitive seller's market. It is evident why dissatisfied purchasers are anticipating a market correction in 2022. However, you may have to wait for some time.

In June 2022, housing prices on Long Island reached all-time highs, with the market showing no signs of abating. Home prices in Suffolk established a new record, according to NYSAR's latest report. In May, when the median sales price in Suffolk reached $555,000, the previous record was set. In June, the median sales price increased to $559,500. Even greater price increases occurred in Nassau County. The median sales prices reached $720,000.

This is an 11.9% increase in Nassau and a staggering 10.7% increase in Suffolk. Despite rising prices, the number of homes sold continues to decline. Compared to June of last year, 8.4 percent fewer homes were sold in Suffolk, totaling 1,564. In June, 1,272 homes were sold in Nassau, a 13.8 percent drop over the same month last year when 1,475 homes were sold. Home prices had begun to decline from the all-time highs reached last summer, but have begun to rise again. The prices of pending sales are significantly greater than they have been, suggesting that home values may continue to rise.

The housing supply in Suffolk county is 2.4 months, a slight increase of 4.3% from last year. Low housing supply and high demand will sustain a seller's market, but one that is less fierce than at its peak in 2021. Buyers may anticipate an uphill fight, but one that is not as severe. As more properties hit the market, prices should begin to decrease, changing the balance between sellers and buyers toward a more balanced market. And when last year's double-digit percentage gains begin to taper down, buyer pressure should subside.

Sources:

  • https://fortune.com/2022/05/31/is-housing-market-bubble-which-markets-overvalued-home-prices/
  • https://www.nysar.com/wp-content/uploads/2022/07/NYSAR_MMI_2022-06.pdf

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