Greetings folks! I was going to digest and summarize the National Association of REALTORs annual economic forecast as I do every year, but it was largely the same thing we’ve all heard for a while: It might appear we’re on the precipice of a value drop but it’s different because of X, Y and Zzzz….zzzz.
If you’ve worked with me, I’ve probably thrown out a disclaimer at some point that I’m not a financial advisor since I still think there’s a market for unopened Halo 3 Mountain Dew. But one thing I do know - the housing market is currently in a rare doldrum that allows folks to get in without having to compete too much. If people want to compare the housing market to the stock market, then you buy low, right? That’s right now. Or yesterday, or 5 years ago, or some other impossible time you shoulda/woulda/coulda.
Interestingly, all the buyers I’ve put under contract in the last several months had one thing in common: The properties they pursued were small acreages around Fort Collins. All were/are looking at upgrading their housing, which might be a product of how long I’ve been doing this, but it likely has more to do with the properties themselves in that they’re all fairly unique. Some of my clients knew it at the time, but their timing was perfect and they’ll be (rightfully) patting themselves on the back in the years to come. They certainly won’t be regretting the purchase, at least from a value standpoint.
To put it another way, picture this. It’s 1998 and you have discovered eBay. You are amazed by the eclectic esoterica and, because you just loved that wacky Melmackian back in the day, you establish a search for an original Alf puppet used in the show. Fast forward 25 years, your phone beeps with an alert: the “hero” Alf puppet is available at a reasonable Buy It Now price. But you hem and haw because you’ve heard 80s nostalgia is totally bogus and the credit card you must use to finance your Alf purchase has lame rewards and a high rate. So you think to yourself, “I’m going to wait because I heard the Alf market is falling like a gold-plumbed spaceship, Willie the dad was caught smoking crack that one time, and I’m sure there’s a chance I’ll see another Alf puppet for less money some day.”
Guess what? Someone else bought your Alf now.
There are good reasons for sitting on the sidelines when house shopping, but being scared of what the market might do should never be one of them. I don’t think it’s going to be the gangbusters spring we’ve had the last several years, but I don’t think it will be super laid back either. If there is a price drop it will be nominal. Rates hit a 20 year high at the end of last year and have been declining since. The conventional wisdom suggests that trend will continue as our economy crawls slowly around the Sarlacc pit of a recession. Whether or not we fall in is up for debate but to me it’s a moot point when it comes to housing. Or SOME housing, to be more precise.
Mortgage applications have been up since the start of the year; one national lender (Academy) said 25% in the last week. I’d chalk this up to optimism (and the fact that they were super duper low) more than clever lender strategies. Perhaps you’ve heard of 2-1 buydowns and all that nonsense? If you truly want to know I’ll explain them to you directly, but if you don’t please save that space in your brain for something more useful, like facts about mullets. The point is, the “lousy” rates led to the creation of a few new programs and some are for first time homebuyers which, by the way, could be you if you haven’t owned a home in three years. Those programs are quaint and all, but unfortunately they’re not going to bring the people who would really benefit out of the woodwork (even though it absolutely should).
In summary, I believe you’ll continue to see a flippant response from buyers on homes that aren’t priced well in all segments. Unsurprisingly, lower priced homes will move like they always do. I’d think twice about new construction unless you’re absolutely dead set on testing the waters of the latest Metro District. Builders are already offering myriad incentives in an effort to keep their prices - and values - up. Unique homes and anything in a great location will move quickly as will anything priced well and in move-in condition. I said it (more than) once before but it bears repeating now: What many people see as a market crash is likely based on their perception of a normal market, which hasn’t been seen ‘round these parts for many moons. So while I would say get ready for a balanced market, you’re pretty much soaking in it already. And as always, I’m talking about the NoCo market and nothing else.
One more prediction: You’ll probably get sick of the term “sintered stone" by the end of the year. Or perhaps that will just be me.
In very exciting news, Erickson Realty is sponsoring the Horsetooth Half Marathon this year which also happens to be the 50th anniversary! We're stoked and hope it is a partnership we can continue for years. As a sponsor we also have a few free entries for clients, so if you’d like to run with us please let me know ASAP. Yes, yours truly is submitting himself to 13 miles of discomfort but please know I will NOT be putting a sticker on my car trumpeting my achievement, largely because I plan on failing. You can find out all about the race, including the course, other sponsors, and registration in the link above. It takes place April 16th, 2023.
That’s it for now! I hope to hear from you regarding real estate, running or racquetball. Cheers, Crip
p.s. Or tennis or pickleball. Bonus points if anyone knows Mr. Chompers.