We have all heard about the “turn around” that the real estate market has been experiencing, but what exactly does that mean, and more specifically, what does that mean to Wheat Ridge?
In the past year there have been 347 houses sold in Wheat Ridge; 12 percent more than the previous year. Perhaps even more interesting, is that these houses sold on average 48 days faster than the previous year. Currently, there are 41 houses for sale in Wheat Ridge; approximately one half the amount that were for sale at this time last year. What this means, is that Wheat Ridge only has 1.4 months of inventory (MOI), which is the sixth lowest MOI of the 28 Denver metro areas studied. This lack of inventory has resulted in a 13 percent increase in Wheat Ridge home prices over the previous year. Now the question is, what does this mean for a seller or buyer?
For sellers, 1.4 MOI means that it is currently a very strong seller’s market. There is little competition on the market, so if a home is priced correctly, it will sell quickly and is likely to get multiple offers. With sold prices increasing on average over 1 percent per month, Wheat Ridge has recovered from the down turn in the real estate market and is quickly reaching record highs.
For buyers, interest rates are still low by historical standards (even with the recent increase) and home prices are on the rise. That means that now is the time to buy and waiting another year could cost a buyer a lot of money. For example, a yearly household income of $60,000 can qualify to purchase a $310,000 home at an interest rate of 3.5 percent. At 4.5 percent that amount drops to $275,000. Therefore, if prices and interest rates continue the trend they are currently on, a person’s buying power is going to diminish in the coming months and years.
Since home prices hit their lowest point in 2008, we have seen a transition from a depressed market, to a strong seller’s market. Fortunately, interest rates are still relatively low making it a good time for buyers as well. 2012 was the initial year of recovery, and the first half of 2013 has shown good growth in sales price and volume. Inventory, which is tight right now, will not get better (from a buyer’s point of view) until at least 2014. While nobody can predict the future, I do not foresee home prices decreasing again in the next 3-5 years. To sum all this information up, it is an exciting time in the real estate market, a time with tremendous opportunities for both buyers and sellers.
Source: Data from Metrolist (7/8/2013); Analysis by Your Castle Real Estate
Time period: July 2011 – June 2012 vs. July 2012 – June 2013
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