Market Outlook for 2006

Greater Denver Area: A “Solid” Buyers Market
 The Greater Denver Area has been in a “down” market now for about 3 years with slower appreciation and a growing inventory of listings. The average sales price in Denver for a single-family home in 2005 was around $280,000, which was a 5.8 percent increase from last year. The median sales price was $246,000 with a 4.4 percent increase from last year. In 2005, an average of 24,000 homes went on the market in the Greater Denver Area with only around 1,000 homes selling per month. This translates to homes sitting on the market an average of 83 days for single-family homes and 111 for condos.  In a healthier or more balanced market we would see around 11,000 homes on the market. Today sellers are finding they must price their home aggressively, often below market value, and have it show impeccably. Well-priced homes in good condition and good locations are selling more quickly and for just 1 to 3 percent under asking price. Buyers are in a great position with a ton of homes to choose from and often are successfully asking for sellers to pay closing costs or provide down payment assistance.
The National Slow Down: “Hot” Areas are Cooling Off!
There are several reasons that cities all across the nation are finally coming down from their “Sellers Markets.” 1) Interest rates are going up gradually 2) Credit restrictions are tightening 3) Foreclosures/short sales are on the rise 4) Interest only mortgages are become a serious problem for many people 5) Changes in capital gains tax structure now and in 2008 6) Higher energy prices. Areas like San Jose, CA and surrounding bay area cities saw an annual appreciation of around 19 percent in 2005 with the median single family home selling for $715,000. According to Realty Times Washington, D.C. saw a 27 percent increase in the average home prices from a year ago. Tucson, Arizona a “Sellers Market” continues to be a hot market with buyers entering bidding wars for homes. Slowly things are changing and these hot spots are seeing a more balanced market with the highest level of listings seen in 10 years.
 Market Predictions: Where do we go from here?
Despite the concerns, both locally and nationally, regarding the stability of our real estate market, homes will continue to sell. The shift is, that buyers are determining what market value is in more areas. For the cities that are still in a “Sellers Market”, this would be a good time for sellers to take advantage of the buyers bidding wars before the market changes. Now, more than ever, people need to realize the value of a skilled realtor with great negotiating skills and experience. With an increasing inventory of listings, homes need a specific and aggressive marketing plan along with realistic sellers. For anyone interested in investing, our mountain and ski towns in Colorado are seeing appreciation well above the Denver area, and are a great investment for rentals or 2^nd homes in many cases. People who are considering buying in the beginning of 2006 will have a large inventory to choose from and great negotiating room. The longer buyers wait the greater the risk of interest rates rising. If you are interested in buying a rental in the Denver area now is the time, if you are willing to sit on your investment for at least 5 years. Sellers who are waiting until spring/summer to list their home should list now. There are fewer homes on the market this time of year and winter buyers tend to be more serious.  The predictions for the Denver housing market are that it will return to a more balanced market in the next few years. The Denver area continues to be a fundamentally sound market.
For more information please feel free to contact me! Here are some good websites:
www.suzeorman.com, www.realtytimes.com, www.smartmoney.com