In the years following the housing bubble, some areas of the United States have recovered faster and more significantly than others, creating uneven markets for both buyers and sellers across the country. Recently, it appears that Denver has joined the ranks of the profitable, with an increasing number of homes appearing on the market and being snapped up by eager new residents. But this seller’s market may offer some risks along with its rewards, and real estate experts are encouraging caution.
While healthy conditions had existed for months, the biggest change in Denver’s housing market came in January, when a reported 3,964 new home listings appeared in the area. An increase of 62% from the 2,450 homes listed in December, experts see the change as an indication that sellers are looking to capitalize on a favorable market. Currently, inventory levels are relatively low and prices are strong, creating a great opportunity for those looking for a new home or sell a property, especially if you are willing to move fast.
Some have noted that the statistics are lower than last year, with 5% fewer new listings and 26% fewer active listings than in 2014. Average home prices in the metro area have dipped as well, dropping from $339,636 in December to $329,141 in January. However, these prices are a 9% improvement since January 2014, when the average home price was $300,592. Moreover, whereas homes stayed on the market an average of 56 days in January 2014, the average period is now only 39 days. These changes are a promising reflection of the competitive market, which exists in spite of labor shortages and rising material costs.
But Denver’s biggest problem might not be the lack of available labor or high price of construction: instead, a number of realtors and property management firms have commented that the competitive market has resulted in a high number of scammers and con artists, all looking to take advantage of eager buyers. For this reason, potential investors are being advised to do their homework before making a hefty down payment.
Experts say that the first and most important step a potential home buyer can take is to research market values in different areas of the study. This can help potential targets identify scams from the start, especially if they aren’t from the area and don’t know much about the different districts. Once a buyer has a working knowledge of local house prices, they should make sure listings are consistent, especially when it comes to sites like Trulia, Zillow and Craigslist. These websites are linked by Postlets, which syncs their prices and details, so a difference in price is an automatic red flag. Finally, the person selling the property should be carefully evaluated. If the listing is a scam, the seller may claim they are unable to meet in person, ask a number of personal questions, or request a photo of the buyer or a large deposit. Any potential scams should be reported to the site the property is listed on.
For those looking to invest in property, however, the opportunity may be well worth the risk. Because the market is so fast-paced and competitive, realtors speculate that the supply could eventually run out. As a result, homeowners looking to sell their homes may put off the sale, fearing that they won’t find a new place to live. In this situation, owning rental property could be a profitable endeavor for Denver residents and out-of-towners, especially with the help of a property management company. In many cities in the U.S., this service is becoming increasingly popular due to fair rates in the industry: a normal property management company will only charge between 8 – 10% of a house’s monthly rent.