The Eagle's View
Rants and raves about real estate related topics by Mike Bradley, Broker/Owner of Eagleview Properties in Littleton, Colorado.Wednesday, September 12, 2007
Rents are rising
According to an article in today's Rocky Mountain News, the Denver apartment market is experiencing lower vancany rates and higher rental prices.
This is the second sign in two days that we may be at the beginning of a real estate recovery. The first sign was the news that year-to-date sales in Highlands Ranch, Colorado were only down two transactions from this point in 2006.
Since the 1920s real estate has followed a cycle that on average last 7 years. The cycle has it's high point when real estate prices appreciate rapidly and there are more buyers than sellers making it a seller's market; there's the equality portion of the cycle where everything is in balance, appreciation is steady at a modest 4 percent; and there's the part of the cycle we are in today where there are more listings for sale than buyers looking for homes, appreciation is fairly flat, and it takes longer to sell a home. The cycle typically restarts when rental prices rise and vancany rates decrease. This eventually leads renters into realizing that it's more affordable to buy a home rather than rent. Those first time buyers enter the market, lower priced homes sell, those sellers move up and so on.
Fortunately, mortgage interest rates have remained at historic lows and our current market hasn't been as bad as it could be. Back in the 1980s when mortgage interest rates were hovering around 17 percent...now THAT was a tough market and one I'm happy I missed as a Realtor.
It's 2007 now and we were in a good seller's market all the way up to around 2003, so there probably will be another year or two of buyer's market in the cycle, but it looks like a recovery is on the way.
This is the second sign in two days that we may be at the beginning of a real estate recovery. The first sign was the news that year-to-date sales in Highlands Ranch, Colorado were only down two transactions from this point in 2006.
Since the 1920s real estate has followed a cycle that on average last 7 years. The cycle has it's high point when real estate prices appreciate rapidly and there are more buyers than sellers making it a seller's market; there's the equality portion of the cycle where everything is in balance, appreciation is steady at a modest 4 percent; and there's the part of the cycle we are in today where there are more listings for sale than buyers looking for homes, appreciation is fairly flat, and it takes longer to sell a home. The cycle typically restarts when rental prices rise and vancany rates decrease. This eventually leads renters into realizing that it's more affordable to buy a home rather than rent. Those first time buyers enter the market, lower priced homes sell, those sellers move up and so on.
Fortunately, mortgage interest rates have remained at historic lows and our current market hasn't been as bad as it could be. Back in the 1980s when mortgage interest rates were hovering around 17 percent...now THAT was a tough market and one I'm happy I missed as a Realtor.
It's 2007 now and we were in a good seller's market all the way up to around 2003, so there probably will be another year or two of buyer's market in the cycle, but it looks like a recovery is on the way.
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