Early Spring 2018 Numbers are In!

I would say that the number one question we as real estate agents get asked is, “Are we in a bubble?”  Everyone feels that our prices in Denver are getting too high and at some point soon the market will crash leaving homeowners high and dry.  I actually attended a class this last week titled “Are we in a Bubble?” put on by a gentleman by the name of Greg Parham.  Greg lives in Littleton, Colorado, with a background in the legal arena and is currently the Co-Founder & President of a well-known title company here in Colorado.  It was a very educational class filled with lots of information about the Denver real estate market.  The best part of the class was that it was filled with charts, stats, and trends for the Denver real estate market over the last 40 years.
There were two charts that I felt were the most educational for people…
          1.  Months of Inventory
          2.  Historical Context of Affordability

Denver Real Estate Market Inventory

If we look at the Months of Inventory in the Denver real estate market we see that Greg defines the tipping point from when a market goes from a seller’s market to a buyer’s market is when we have enough homes in any given month to last us 4-6 months.  This means that if we were to add no new homes for sale to the market that when we have more than 6 months of inventory we will be in a seller’s market.  When you look and see that we have had less than 4 months inventory for the last six years and we are currently sitting at .08 months (less than the one month that we sit in), I do not see the market slowing down anytime soon.
Denver Real Estate Market Affordability
The next chart that I really felt was very interesting was a chart that they did that basically compared the affordability of homes in Denver since 1971.  People here in Denver feel as if the prices are simply too high for people to afford.  The research compares the Prices of homes with the Income at that time with the mortgage rates to get a Debt to Income ratio so that you can compare where we stand in each time period.  If we look at the chart we can see that we sit at just over the national average over time.  This means that homes really are not that much more expensive than in times past.
People of all times have thought the same thing, but when you look back we are just keeping up with the income and job growth as well as inflation which we have always had.  To put it in very simple terms, when my grandparents bought there first home it cost them just over $20,000.  I am guessing when the prices hit $40,000 they probably thought no one will ever be able to afford a home at these prices.
With that being said, Denver is as it always has been and will probably be for years to come…Growing!!