By: Sally Grenier, Broker Owner
Metro Brokers / Grenier Real Estate
Whether I'm working with buyers or sellers, they always ask me the same question: "How long is this market going to last?"
That's a great question, and if I knew the answer to that, we'd all be millionaires! Unfortunately, there is no crystal ball and no way to predict what the future holds. I cannot tell you when the perfect time to buy or sell will be.
Sellers want to know if they should wait and see if prices continue to rise, or if we're at the "peak" and they should sell now before the market drops. Buyers, on the other hand, are often wanting to "ride it out" and wait for prices to come back down.
Nobody can give you an answer with 100% accuracy as to when is the best time to buy or sell; however, we can look at historical trends and we can see how the real estate market runs in cycles. In addition, we can focus on what really drives the real estate market -- it's all about supply vs demand.
Last year I found this awesome article written by a colleague, Drew Morris with Your Castle Real Estate.
In the article (keep in mind this is now a year old), Drew points out this interesting graph showing the cyclical nature of the Denver metro housing supply (Months of Inventory):
He breaks this down in terms of market trends:
- 1985-1992: 8 years of an extreme buyer’s market.
- 1993-2001: 9 years of a seller’s market (environment similar to today).
- 2002-2011: 10 years of a buyer’s market.
- 2012-2016: 6 years of a seller’s market so far.
Note: 3 of the 30 years were considered "balanced markets" as the market transitioned between buyers and sellers markets.
According to Drew,
"I won’t try to predict the future here, but based on the historical
trend of the Denver real estate market (based on this graph) we could
say we have at least another 4-5 years of a seller’s market."
(NOTE: This is now 3-4 years)
He goes on to say, "It is natural for all of us to erroneously think of market cycles in short terms. A quick look at the last market cycle shows clearly this is not how the Denver area real estate market works. The real estate cycle tends to move in much broader periods as demonstrated by the two graphs above. Our last market upturn was from 1990 - 2007; 17 years of continued price appreciation! This is why predicting short-term market movements can be very difficult and frankly just not worth your time. Recognizing the market will move in much broader cycles is more accurate. It's what we learn by studying real estate market cycle history."
He concludes: "No one can predict any real estate market with 100 percent accuracy. I can't, the Federal Reserve can't, the banks with all the money can't (obviously!), no one can. But, understanding how market cycles work, and recognizing how low our current inventory is, I can say with confidence I do not see any impending weakness in the Denver real estate market over the next several years (especially with Colorado’s population expected to grow by 50,000 per year for the next decade!). Is the bottom really about to fall out? "
So how does this apply to YOU and YOUR real estate goals?
For Sellers, now may be a good time to sell, while prices are high. And for Buyers, now might be a good time to buy before prices continue to rise, and while interest rates are still low.
I'd be happy to sit down with you to discuss your situation, your wants and needs and what is the best option for YOU. Give me a call!