In the United States, home prices are increasing and higher interest rates are causing home sales to decline. According to reports from the National Association of Realtors, buyers are becoming savvier, which is causing a cooling of the housing market. The cooling effect parallels the changes in the economy triggered by the collision of the inflation that has spiked in 2022. In addition, the coronavirus pandemic has led to a multitude of economic concerns that include: higher borrowing costs, a battered stock market, higher costs for everything and consumers’ inability to properly save for down payment.
In the state of Colorado, inspections are becoming trickier and first-time home buyers are exhibiting the highest level reluctance in recent memory. As a result of residences sitting on the market for months, the asking prices are being constantly cut down. However, most prospective home buyers are still settling for rentals instead. The main reason appears to be the higher cost of home ownership.
New Economic Conditions
A realtor with lots of experience listing houses for sale in Erie CO affirms that the housing inventory (or active listing) in Colorado is constantly adjusting to new economic conditions. The metropolitan areas are becoming increasingly expensive to buy a house in or to even live in. Moreover, professional house hunters are multiplying by the week. Their job is to buy property and fix it up in order to sell it at a higher price. They are, however, over-saturating the market and creating unnecessary competition for other types of buyers. In addition, cash offers are becoming more frequent and affordable options are lessening by the month. As a result, the payment-to-income ratio is shifting at an alarming rate.
Main Housing Trends
All in all, the main housing trends of 2022 Colorado include: fierce competition, rising rents, unsustainable rate of home appreciation, decreased affordability on account of higher costs of building materials, consumer pull back and increasing inventory. In this climate, most homeowners are inclined not to sell and are also unlikely to refinance their mortgages. Furthermore, new constructions are not having a significant impact on demand and affordability limits are becoming increasingly obvious.
As the trend of refinancing mortgages is starting to slowly fade, prices are slowly stabilizing even though rents are still climbing and, therefore, putting a lot of stress on consumers. The rental market is not yet stable and rental prices are not showing significant signs of decline. Nevertheless, there is a lot of hope for the future due to the end of the pandemic and the normalization of the political climate.
To sum up, the housing inventory is adjusting to new economic conditions and higher interest rates are causing home sales to decline. Inspections are becoming trickier and first-time home buyers are exhibiting an unusual level of reluctance. In addition, the trend of refinancing mortgages is met with a significant setback even though prices are slowly stabilizing. The rental market in particular is becoming more hostile for consumers as rents are continuing to climb. However, predictions of future developments entail a stable real estate market and a booming housing inventory.