U.S. housing starts and permits fell in November but overall the housing market seems to still be improving. Groundbreaking on new homes (Single family + Attached Homes) dropped 1.6% after seasonal adjustments. Single Family housing starts dropped 5.4% but Attached Homes (Condos and Townhomes) actually increased 6.7%. Permits lead starts by 3-4 months and dropped 1.2% for Single Family homes and a whopping 11% for Attached Homes (Condos and Townhomes).
Slow wage growth continues to hold back the housing market. Wages have not increased as fast as home prices over the last several years which makes affordability a challenge. Rising interest rates and tighter mortgage approval guidelines are also constraints although rates have came back down and more flexible loan programs have are starting to make a come back.
What’s In Store for 2015?
Mmany experts believe the current job growth will lead to increased wages for 2015. In turn, this should bring more first time buyers & younger buyers into the housing market. Ultimately, the entire housing market is driven by first time buyers. Without them, sellers cannot move up etc and we are left relying on only “move down” buyers which are a much smaller segment of the real estate market.
What Does This Mean for Denver Metro & Boulder County Real Estate?
Here along the Front Range we are fortunate to live in a desirable place to live. Combining that with booming medical, oil & gas, and tech industries, our local Denver metro and Boulder county real estate market has a projected housing shortage (if you can believe that) in the next few years. Despite all the building you are seeing, if new construction doesn’t pick up, there will be a shortage of homes. If this projection holds true, we will continue to see strong home price gains until supply catches up to demand. In summary: Buy now if you are on the fence. If you are moving up, do it now too. The only segment that I believe should wait are those downsizing. 2015 looks to be another strong year of price appreciation and it makes sense to stay put another year (in my opinion). Questions? Give me a call or email! Mike