It is official – Colorado is now the nation’s top performing real estate market.
CoreLogic released its year-end numbers last month and Colorado was ranked number one in the country with home prices up 8.4% in 2014. Texas was number two, with appreciation of 7.6%.
There are several firms that track home valuations, including Zillow, Trulia, Case-Shiller and the Federal Housing Finance Authority (FHFA). All rank Colorado in their top three for 2014 performance with appreciation rates between 7% - 11%, depending on methodology.
It’s a combination of factors… record-low inventory, record-high in-state migration, an unemployment rate statewide of 4.1% and just 3.6% in Denver, virtually no construction between 2008 and 2012, and a controversial construction defects law that has essentially shut down the condo market since 2007.
Add it all up, and you have lots of jobs, rising incomes, amazing demographics (young, educated and willing to work) and no homes for them to buy.
Colorado is number two in the US in terms of college graduates per capita. There are more Millennials in Denver than any other age-demographic group. Coldwell Banker just ranked Denver the top commercial market in the US. The good news is literally everywhere.
Will it last forever? No, nothing lasts forever. But how long will it last? That’s the real question.
The fact is that jobs drive the housing market. If the employment rate remains low, housing will remain strong. The natural progression is for housing to eventually become so expensive that wages cannot support prices, and at that point the market stalls.
When does that happen? Watch the unemployment rate, and you’ll see what the future holds.
Historically, any market with unemployment below 5% is going to have moderate to strong growth in housing prices. At 3.6%, Denver is another league altogether.
If you are looking to buy today, get ready for a fight. There has never been a market like this in Denver, and if you aren’t prepared to compete, you probably should just step aside.
If you are thinking about selling, you will never have market conditions tipped so heavily in your favor again. Do you run the risk of leaving some money on the table if you sell now, versus trying to time the market. Yes, you may leave some money on the table.
But the key thing for you to consider is how little competition there is right now, and how we’ve never had a market where sellers are routinely seeing offers (especially at the lower price points) $5k, $10k or even $15k over list price for the best homes.
Houses are not supposed to be easy to sell. Even in a normal market, it's supposed to take 60 to 90 days. Today, if a listing lasts five days, chances are it's a dud.
Talk to anyone who tried to sell a home in 2011 (18,000 homes), 2010 (23,000 homes) or 2007 (31,000 homes). It was brutal.
There is a lot to be said for selling in an environment where you have complete control over the market. You can sell quickly, choosing from several well-qualified buyers.
If you stage it well, price it right, market it strategically and know how to properly manage a bidding war, you're going to get a great outcome. If you can sift through the emotion of the market to find the most qualified, committed and properly educated buyer, this process can be quicker, easier and more profitable than at any time in memory.