Colorado Realtor Survey
On a monthly basis we will be surveying local real estate agents to provide you a better insight to the local Front Range real estate market. Most real estate survey’s are on a national level or answered by “real estate” experts that are not active in the real estate market. We hope to provide potential home buyers and sellers in Colorado with “real” expert opinions and advice on the local real estate market.
What is the Biggest Challenge/Obstacle in the Front Range Real Estate Market?
Our Colorado real estate agents listed demand and mortgage financing as the biggest obstacles to our local real estate market. Demand can vary by city/neighborhood and price range, but most Colorado agents would agree that demand is well below normal levels. Even though low interest rates and real estate prices have made homes in Colorado more affordable then they have been in decades, demand has suffered.
Where Have all the Colorado Home Buyers Gone?
Although it may be less expensive to buy a home in Colorado, there are many obstacles preventing people from buying a home, therefore, limiting demand. There are a lot of potential home buyers that are “stuck” in their current homes because of the declining real estate values over the last few years. Most reports show that about 20% of Denver Metro homeowners currently owe more than their home is worth. Underwater homeowners don’t have the money to sale their house AND for a down payment to purchase a new house, trapping them in their current home.
While mortgage financing is available, there is no question the process and guidelines are now much more difficult than the past. Current homeowners that try to rent out their current home and buy a new home in Colorado because they can’t sale face much tougher guidelines. Most lenders will require the home owner to qualify for both mortgage payments often limiting what they can afford or blocking them completely from obtaining a new mortgage. Other mortgage guideline changes (to name a few: the elimination of seller paid down payment assistance, reduction in maximum debt-income ratio, and increase in credit score requirements) have reduced the pool of potential home buyers in Colorado.
The large numbers of foreclosures and short sales over the last five years also reduces the home buyer pool. FHA mortgage guidelines require home buyers to wait at least three years before they are eligible to buy after a foreclosure or short sale and conventional guidelines require seven years. Although temporary, this is a large number of Colorado home buyers sitting on the sidelines.
When Will we See Demand Increase for Colorado Real Estate
When will demand, and therefore, Colorado home prices increase? The easy answer; we won’t see demand at normal levels until we see employment numbers improve. More jobs solve almost all economic problems and they would definitely help turn around the real estate market. Even though demand may be lower than normal, homes in Colorado that are priced aggressively or homes in desirable Colorado neighborhoods are still in high demand. It's important to note that many areas in the Denver Metro Area are experiencing increase in demand and appreciating home values.
If you have questions about a specific neighborhood/city/area please contact one of our local professionals for a detail analysis of your area.