One question that I am frequently ask is if the real estate market will undergo a massive correction? Is a housing crash likely to happen in Northern Colorado? Buyers are particularly concerned about this. Many buyers can remember the housing crisis that occurred in the mid to late 2000’s. If the buyers themselves cannot remember that crisis they have parents that can. Do you need to be concerned about this when considering buying a home? Here is what you need to know about real estate market corrections.
Many of the factors that were present and that contributed to the housing crisis are not present today. Mortgage loans are not as easy to get today as they were then. We no longer have the stated income loans. There also is not the speculation in the market that there was then. There were a lot of crazy deals happening that contributed to the crisis. Today we have real buyers wanting to buy a home to live in.
Is a Housing Crash Likely? Supply and Demand Matters
How do I know for sure that we will not have a market crash? I look as several factors. One thing to look at is to see what supply and demand in the market is like. We have great demand for homes. It is not uncommon for a home that comes in the market to have several buyers write offers to buy the home. Only one buyer can have their offer accepted and purchase the home. That means that all of the other buyers that wrote contract on that home that did not get accepted are often times continuing to look and trying to buy a home. This is happening due to limited inventory of homes for sale. We do not have enough sellers that are wanting to sell and do not have enough new homes that are being built to meet the demand.
Demand in our market also comes from the desirability of our area to live in. This has only increased during the pandemic. The pandemic made it more common for folks to be able to work from home. If you can work from anywhere, why not live in a place that you want to live. That brought many people to Northern Colorado to live here and work remotely. Because of this we also had an increase demand.
Long Term Investors
Another factor that can demonstrate the strength of our real estate market is to look at the number of investors that are purchasing homes to use as rentals and the strength of the rental market. Our rental market remains strong with a vacancy rate of less than 2% and consistently higher rents being charged. This makes Northern Colorado a great place to invest in real estate and this also adds to the demand for real estate to purchase.
One other thing to look at to determine the strength of a market is to look at the appreciation that the market is seeing. During the housing crisis Fort Collins had one year where we had depreciated values of homes. Just one year and it was less than one percent. Appreciation has been in the double digits in recent years and is expected to slow some but remain strong.
So, is a Housing Crash Likely? The real estate market in Northern Colorado is strong and all indicators are that it will remain so. The Council of Residential Specialists also thinks this trend will maintain nationwide. Don’t wonder when the sky will fall. Invest in your future and buy a home. Contact Us today to get the ball rolling.