|At then end of this time
period, the value will have gone up above the point of purchase.
When you try to time the exact bottom, you are just as likely to end up
buying on the way up as you are at the bottom or on the way down.
The only time that we know when we have reached the bottom is when we
are already on the way back up. Therefore, we have to look at the
indicators to tell us when we seem to be getting close to the bottom.
So what are the indicators that make me feel so
confident about Denver's market. Here are but a few:
Inventory is shrinking. The number of homes on
the market has recently dropped to a seven month supply. An eight
month supply indicates a buyer's market and a six month supply indicates
a seller's market. We are now in a slightly neutral position.
This decrease is due to a number of factors. First, activity has
increased. While 2007 marked a period where buyers sat on the
sideline and waited for the market to crumble, the stability of the
market has led these buyers to act in 2008. Home sales in April
where up 15% over those in March. Additionally, builders have cut
back significantly on new home starts. The 4th quarter of 2007 had
the lowest level of new home starts in 20 years. While this has
other economic ramifications, it has helped to shrink the housing
inventory. Lastly, the average days on market is consistently
declining from the levels in 2007.
So what does all of this mean? Even though on
average prices have continued to decline by about 2 to 2.5%, this is a
continually shrinking number. Furthermore, there have been many
areas in the metro area that have held steady or have even shown
increases in price. What helps make the Denver market look
attractive in addition to the stable housing picture is our relatively
positive economic outlook. Our unemployment is below the national
average and is expected to decrease in the coming year. We have a
relatively low cost of living compared to many major markets across the
country. And perhaps most importantly, our housing correction took
its biggest hit in 2001. Since that time, we are holding up very
well compared to most markets across the country. Forbes Magazine
even named Denver as one of its "10 Best Cities for Home Sellers" in its
The bottom line is that it is a great time to buy
property in Denver. Interest rates are still at historic lows and
prices have stabilized. The savvy investors are buying now because
once the signs are obvious that the market is going up, everyone else
will be jumping into the fray and the competition will further boost
prices. The opportunity will have already gone.
Scott Friedman is a top producing agent for Prudential
Colorado Real Estate. He specializes in market trends and analysis and
continues to excel in today's opportune market.