Welcome to the topic “CURRENT AND NEAR FUTURE COLORADO HOUSING MARKET ANALYSIS.”
Colorado is a unique real estate market that usually has outperformed the rest of the nation due to relocation and vital employers’ demand. At present, these trends continue but at a slower pace. It is essential to separate the residential trends from the commercial trends as each might be impacted very differently in order to start with the future analysis.
The Colorado real estate market started very strong in 2020 and had one of the country’s hottest seller’s markets. The houses would have multiple offers and far above the asking price. Since 2018, the seller’s market began to slow down and continued to do so in 2020. In the second quarter of 2020, we can see a drop in the number of available homes.
Colorado is still a seller’s market, but not like 2016. The Colorado licensed realtors use the term ‘months of inventory’ to measure the strength of the market. This term references how many more months of sales a market can sustain if there are no new homes listed for sale before running out of inventory. The best realtor team considers it a seller’s market when the inventory is of less than four months.
At the height of the crash of the housing market, Denver had a 6.4 month supply of inventory, and this was a strong buyer’s market. It was a time when there was plenty of choice of homes for the buyers, and they could often get a deal. Denver has a 1.7 month supply of inventory, so it is still considered a seller’s market. The homebuyers still have a hard time finding a home in certain areas, but most sectors have experienced longer days on the market as compared to what was seen in 2016.
On the residential side, there are three main markets in Colorado i.e., the front range that include the Denver front range corridor. Then there is the mountain community/resorts that include areas of Aspen, Steamboat, Vail, etc. and the other regions like Granby, Fairplay, Delta, etc. It is expected that each of these areas will perform radically in the coming near future. The groupings are undoubtedly considerable, but each group will indicate what is likely to transpire every submarket.
The Front Range houses in the metro area will continue to be in high demand. This is due to the lack of supply for this particular price point and continued net migration. For the Mountains/Resorts, there are a few factors that will continue to drive this price point. First of all, many mountain communities have a huge desire to live in a neutral location. As there is net migration into the mountains, inventory at this price point is low because of the high costs of building in the mountains.
The other or the more rural areas of the Colorado Investment properties will be flat because the net out-migration continues to the more robust metro markets. We will see some markets that will buck the trend, but the areas will continue to stagnate overall.
Colorado has various unique markets that are likely to react differently than the other markets. Colorado’s economy has taken the shock like the rest of the country in the first half of the year, but it is coming back quickly and outperforming the trends.
The investors need to note that various wildcards might alter the future analysis, like how quickly the Covid-19 pandemic is contained and how quickly the consumer’s sentiment comes back that can be too inconsistent.
The first half of 2020 was a challenge, but the second half of the year has seen a recovery. How quick the recovery will be, is a million-dollar question, but there is no doubt that Colorado will remain desirable for the business relocations that will keep driving the economy.
The Coronavirus must be a short term shock that the majority of markets can recover from quickly. In general, the real estate in the front range of Colorado and resort markets should be holding up ok in the near future with no colossal downside risk, except for the retail and office on the commercial side.
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