About 3 times a week I get asked to gaze into my crystal ball and predict next years housing outlook. Being the gracious Realtor I am, I always comply. But every time I try, it gets a bit cloudy and I can’t seem to get an accurate prediction. Hard to believe, huh?
But I have learned over the years to look at some of the market indicators to help get a sense for what might be in the tea leaves for the coming year.
Here are a few factors to consider:
- Home price increases are starting to decline. In 2015 we had a 12.1% increase, in 2016 a 10.27% increase and in 2017 a 8.43% increase. This trend will continue slightly downward and will push into 2019, thus creating a cooling off period and help stabilize the imbalance we currently have in the housing market.
- We continue to have a strong employment picture in Colorado and especially in northern Colorado. Between Weld and Larimer counties, unemployment rates for the past couple of years has hovered around 2.6%. However, wages are not keeping pace with house price increases. (See the next point).
- Location, Inc., a geographic research and data mining company, said it used more than 200 variables to predict housing trends in Denver, Boulder, Greeley and Fort Collins. It found an average drop in housing pricing of 9.3% over the next 5 years starting in late 2019. The reason? Wages are not keeping up with home price increases that have occurred in recent years.
- Did you know High Net Worth Investors predict a recession in 2020. I do think these folks have an eye for trends and their predictions are worthy of consideration.
- The American economy has had a remarkable run for a number of years. However, real estate typically goes through 10-12 year cycles. Our last downturn was in 2008, so a downturn in 2019 is right on schedule.
- Inflation and interest rates are inching up. This naturally has a cooling effect on housing prices. A shift towards a buyers market is likely to occur. Average 5.3% throughout the year, reaching 5.5% (30 year fixed) by year end.
Colorado has typically weathered housing crises far better than other areas of the nation. But a shift towards a buyers-market is very likely to occur later in 2019.
So, there you have it. If you have been on the fence about whether to buy or not, 2019-2020 may be your year to purchase a home. If you’re planning to sell, you may want to call your agent sooner than later. Of course, you can reach me at 970-484-1962 to discuss your personal situation.