Our Market is Correcting – Not Imploding
“Optimism is essential to achievement, and it is also the foundation of courage and true progress.” – Nicholas M. Butler.
It’s time for an intervention. If you’re absorbing those unnerving headlines about the housing market, please, put down your phone (of course after reading this blog)! Understanding the reasoning behind our market’s shifts is crucial to maintaining a healthy mindset about your goals for buying and selling.
Our old market was growing toxic.
While buyers and sellers were enjoying historically low interest rates and record-breaking returns, the trajectory was unsustainable and becoming unhealthy. The extreme buying frenzy was escalating prices, bidding wars, and significant appraisal headaches. Could you imagine if that momentum had lasted for another year, two years? The Front Range would’ve become such an unaffordable market, it’d drastically change our communities, culture, and how we live.
A reset helps both buyers and sellers.
You may have heard companies like Peloton, Meta and Twitter are resizing after becoming over-bloated with staff. While it’s an uncomfortable, heavy transition, our job market remains stable, allowing those employees to find new positions. Our market is like a company and the Federal Reserve is “resizing” – shifting it to a more normal pace. After raising mortgage interest rates, the buying frenzy cooled off. Many Front Range communities are experiencing “pre-pandemic markets” where sellers receive at the asking price and buyers have more inventory to choose from (and time to decide). Yes, the adjustments are coming at a cost (we hear you, buyers, who must wait/make impactful compromises to purchase). Becoming a healthier market is not going to be an easy journey.
Until we reach cruising altitude…
It’s going to be a bumpy ride. Interest rates will fluctuate a lot. And we’ll all need to adjust our expectations, strategies, and plans for buying and selling. But remember how much we’ve grown in home appreciation over the last three years. The median sales price for a Colorado home in October 2019 was $357,000. Last month it hit $487,500. That’s a 26.7% gain in home appreciation! It offers incredible financial stability.
There is room for the Fed to correct our market.
And remember, the Front Range is one of the most attractive places to call home in the U.S.. The demand for homes isn’t going away. Even if you bought at the beginning of the year and lost some value, there is no doubt your home will be worth more in a few months or years.
Will the recession cause home prices to massively drop? Check out our blog comparing 2008 to 2022 markets.
Mind over headlines – that’s our encouragement to you. You’re going to hear scary news bits for a while. Remember, the sky isn’t falling – we’re intentionally descending to healthier heights. So do yourself a favor and check in with your RE/MAX Alliance agent. When you see alarming news in the media, don’t hesitate to text, call, or email them your questions. Your RE/MAX Alliance agent is your best local, boots-on-the-ground, expert news source during these uncertain times.
Sources: reuters.com, coloradorealtors.com, federalreserve.gov