Happy New Year! Thank you all so much. Not only was 2016 a wonderful year in terms of business, it was another special year of spending time with so many of you. From weddings to picnics and even charity events, it was very fun. I’m very much looking forward to more of the same in 2017.
On the business side of life, the final quarter of 2016 has been full of intrigue and change. Interest rates have begun climbing and while still at historic lows, buyers are feeling pressure with every quarter point change. The general prediction I’m getting from those in the lending industry is that we are likely to see some small correction downward as the recent jump is a bit more than expected.
We’ve seen a noticeable slowdown in homes coming on the market in the last quarter of 2016. Election years tend to be that way as businesses and individuals put things on hold until they have a grasp on the post-election environment. Now that we are there and the overall economic outlook seems good, I do think we will see a very busy spring as sellers will want to list earlier as rates are projected to rise throughout 2017 and the lower the rate, the higher the sale price as more buyers can afford the home.
I mentioned above that inventory levels have dropped once again. We will end this year at historic lows. Almost every market segment has a serious shortage of inventory. I am curious to see how the first six months of 2017 play out. The number of small-investor owned properties is quite high as is the value of those holdings. I’m wondering if we will begin to see some profit taking/ selling of these properties next year. That would be a welcome event for buyers: it is extremely difficult to find homes these days.
Douglas and Elbert Counties are poised to see a lot of activity. There are a few developments in Eastern Douglas and Western Elbert coming online in 2017 that will offer new homes on 1+ acre lots. The Ridgegate Development along I-25, between Lincoln and Ridgegate Parkway will continue to grow as construction of the three new Light Rail stops has begun. Western Douglas County is about to get very busy as well as Sterling Ranch comes online. That development is generating a lot of interest. Its proximity to Chatfield Reservoir, the foothills and therefore the mountains make it very desirable. The widening of C-470 will hopefully help too, as commute times will be an important consideration for buyers considering that location.
The Eastern side of Metro Denver is also growing. From Southlands in Aurora/ Centennial to North Denver and Adams County things have become quite busy. What was once considered on the outskirts is now an opportunity to find new homes at more affordable prices.
Keep your eye on Panasonic’s “Smart Town” Development by DIA. This is quite an intriguing project. It offers some amazing technology that you will likely find appealing and possibly even a bit unnerving. I’ve read that they have cameras on light poles that can supposedly use facial recognition to determine if you live there or are a visitor, they will offer residents in home biomedical services and it will have amazing transportation systems throughout the community.
There will be another large push this year to resolve the Construction Defects issue that has stymied multi-family construction for several years now. With the increased cost of land, going vertical is only going to become more popular and necessary for the economics of building market priced homes.
The myth of millennials not wanting to own their own homes or live in the suburbs has been debunked. I was never a believer of it in the first place but you could hardly find a media outlet that wasn’t preaching the end of the American dream of owning a home. Marriage, babies and even pets have a way of creating an urge to have more room inside and out. Combine that with the high cost of renting and you have all the motivation you need for a generation of home buyers. For me helping someone buy their first home is an immense pleasure. I will never forget what a huge event it was for me to be my first place and it’s that emotion that inspires me to work so hard to help make that available to others.
As I look forward into 2017, the general forecasts for our Colorado economy are quite good. For the next 3 to 5 years’ things look promising. The market is healthy and is doing a good job of balancing itself out. An example is that while we are seeing historically low inventory, the average days on market for a home has risen from 2015. The special ones still disappear quite fast but the pace at which inferior listings sell has slowed a bit, especially this time of year. While we’ve seen resistance from buyers to unbridled price escalation, median and average prices are up approximately 10% year over year.