INTRODUCTION
If you’ve found this blog post, chances are you saw an ad or have been researching homes and properties in the mountains of Summit County, Colorado. We’ve already compiled a list of neighborhoods, a comprehensive list of STR (Short Term Rental) regulations for the Town of Breckenridge as well as other resources, including a video that shows the passion of this website’s featured broker, Dina Sanchez.
Please read the following information as a summary of ideas and then contact us with any questions or comments. Or, feel free to skip this article and call or email right away to get started on your search for the dream home your family has always wanted. Click here for contact information.
#1 – MORE INVENTORY
Increased options for buyers, simply put, there’s more to choose from. The shift is bouncing back from historic lows to something closer to normal.
#2 – LESS COMPETITION
Decreased number of buyers means less likelihood of a bidding war.
#3 – BETTER NEGOTIATIONS
Buyers can come in with a stronger negotiation strategy. Cash is still king, but still make a plan to come in with a strong offer with a substantial earnest money deposit, appraisal gap contingency and less potential objections.
#4 – PROTECTION AGAINST INFLATION
Over the last year, the market has seen inflation and a change in the buying power of the dollar. While these changes can affect the stock market for the worse, real estate weathers the inflation storm. Many times, inflation can benefit property owners. Rent and real estate prices tend to rise with inflation. [Source]
#5 – BUILD EQUITY NOW
Start accruing equity through appreciation, approximately 10-15% annually. See Values section below.
#6 – MAKE A PLAN TO REFINANCE
Mortgage pros say to get in now and buy your forever home, but it won’t be your forever mortgage, as you can make a plan to refinance when rates fall again. Mortgage forecasting states that the rates will decrease in time, and therefore again increasing competition and returning to the market to its previous state (low inventory, extremely competitive sellers market, etc.) [See video below or click here]
#7 – THE MARKET IS NOT GOING TO CRASH
While some think that the market is going to crash and prices will drop significantly, that may not happen. Yes, you will see price drops and homes will sit longer on the market, but that does not constitute a crash. Some believe our mountain markets are a bit more recession-proof and others look to the following items to consider: 1)The recent growth in home prices is because of demographics and low inventory and 2) Credit risks are low because underwriting and lending standards are sound. [Source]
Mortgage Pro Opinion – Josh Smith
We met Josh as a client and have now come to work with Josh as a colleague and friend. He splits his time between Texas and Colorado and is licensed in both states and can help shed some light on the current market with the following video. Please let us know if we can help patch you through to ask Josh more questions. He’s one of a few mortgage pros we recommend potential buyers consider when working on the financial part of the equation when purchasing a Colorado home near Breckenridge.
FOR DISCUSSION AND FURTHER CONSIDERATION
Lack of Inventory
Q. What caused the lack of housing, was it the Pandemic?
A. The pandemic didn’t produce this imbalance, but it did exacerbate it. Supply was temporarily hindered by a coronavirus-related pause in construction and by supply-chain-related shortages of building materials. And demand for spacious suburban houses was pushed upward as many Americans, especially remote workers, turned their attention away from downtown urban areas. [Source]
Inflation and the overall Global Market Influence
Q. What’s causing the decline in the markets this year?
In short, inflation, interest rate increases, the war in Ukraine, higher oil prices, supply chain issues, and lower corporate earnings have all put downward pressure on stock prices. These factors, in addition to the collapse of a stablecoin called Terra and withdrawal freezes from crypto firm Celsius, have contributed to large declines in crypto as well.
Home Values
“I just don’t see the the kind of mortgage defaults and distressed sales that would be necessary for big declines in housing values. That’s when you get crashes, when you have lots of foreclosures and a lot of distressed sales,” Zandi says. “That’s just not going to happen.” [Source]
“I don’t think you’re going to see homes go down in value really. The truth is, real estate always does pretty well during a recession. What will change, however, is the anxiety of buyers.” (Orman predicted house sellers would no longer receive dozens of offers above their asking prices, and warned buyers would face pricier mortgages and higher property taxes, insurance premiums, and maintenance costs.) [Source]
Fears of a Recession – Why it May or May Not Happen
Not only does JPMorgan not expect an economic recession to materialize anytime soon, but it expects a reacceleration in global economic growth, the note said.
“While the probability of recession increased meaningfully, we do not see it as a base case over the next 12 months. In fact, we see global growth accelerating from 1.3% in the first half of this year to 3.1% in the second half,” JPMorgan said.
It said much of that growth would be driven by China, whose economy could grow by as much as 7.5% in the second half of the year, as long as lockdowns don’t resume. That strong growth would trickle down to other emerging-market economies, the bank said. [Source]
DISCLAIMER
* All statements and discussion points are subject to the author’s opinion and links to sources are provided whenever possible. Readers are advised to conduct their own research to be as informed as possible.
