For as much gossip and trepidation as there is circulating in the current Colorado real estate market, we're not presently in a housing bubble! Despite rising mortgage rates and ongoing discussions about the housing market crash, the reality is quite different from what we saw in 2008.
Why This Isn’t 2008
There were three major causes of the 2008 housing crisis that we aren’t currently facing:
45% of first-time home buyers in 2008 purchased their starter homes with zero dollars down.
78% of first-time homebuyers utilized adjustable-rate mortgages (ARMs) instead of fixed-rate mortgages.
We had a huge housing inventory surplus back then.
Today, the average down payment on a home is 16%, showing that buyers have home equity from the start. ARMs are far less common, as many buyers opt for the stability of a fixed-rate mortgage. And an oversupply problem would be a dream compared to the low inventory struggles we currently face.
A Stable Market with Rising Home Values
We're not in a normal market, but we're also not in a real estate market crash. Home prices and housing prices continue to rise across Colorado, including in Colorado Springs, Denver, and Grand Junction. According to Freddie Mac, lending standards remain tight, and the number of foreclosures is significantly lower than in the past.
Since the Federal Reserve began adjusting the federal funds rate, many have worried about higher interest rates pushing buyers out of the market. However, demand remains high, especially for single-family homes. Home sales in the Denver metro area and beyond continue to move quickly despite rising interest rates.
The Supply and Demand Dilemma
Over the course of the pandemic, we’ve seen a 59% decrease in housing inventory and an increase in home buyers by 43%. This supply and demand imbalance keeps home prices elevated. While some fear that higher interest rates will lead to a market crash, the reality is that housing affordability remains a challenge due to low inventory, not a lack of demand.
Fortunately, mortgage interest rates have seen some fluctuations, but they are still relatively low compared to historical mortgage rates. Even with the Federal Reserve’s adjustments, experts predict that rates will stabilize rather than skyrocket.
When Will the Housing Market Crash in Colorado?
Don’t mistake today’s climate for the conditions that led to past market crashes. The Colorado housing market, including Denver, Colorado Springs, and the Denver metro area, remains strong. While some market trends shift, the fundamentals—such as buyer demand, job stability, and real estate market predictions—indicate continued growth rather than a collapse.
Instead of waiting for an uncertain market crash, take advantage of the current market by making informed decisions. Whether you’re considering purchasing a single-family home, investing in commercial real estate, or looking at real estate agents for guidance, now is a strategic time to make a move.
Let my tenacity move you!
If you’re ready to explore homes for sale in Longmont, or need a dedicated real estate agent to list your property, I’m here to make the journey seamless. Check out my monthly vlog, subscribe to my YouTube channel, or dive into my blog for expert insights on market predictions and homeownership topics like:
"Pulling a Building Permit is Simpler Than You May Think!"
"Perks of Home Ownership."
Don’t hesitate to reach out with any questions about Colorado real estate—I’m always here to help you find answers or connect you with the right resources.
Be sure to stop by my YouTube Channel to watch episodes of Proper-Tea Time, my show on all things Colorado housing market and real estate market trends.
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