The “R” Word

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Our clients wonder what a recession would mean for the real estate market.

Many assume it would translate into a downturn in prices.

Some even worry that it would cause values to come crashing down.

We looked back in history, at past recessions, to gain an understanding of what recessions mean for the Front Range market.

We used the extensive data from the Federal Housing Finance Authority to look at home price appreciation during the five recessions dating back to 1981.

What we found was quite interesting.

During the five recessions of 1981, 1990, 2001, 2008 and 2020, home prices along the Front Range went up in all but the 2008 recession.

What was unique about 2008 was that housing led the recession.  Whereas the other recessions were triggered by some combination of inflation, oil prices, and stock market issues (plus the pandemic in 2020).

So, if the past is an indicator of the future, a recession is not guaranteed to result in lower real estate prices.

The Front Range real estate market has always demonstrated long-term health and a great resiliency to outside economic events.

See the chart below for the detailed research…

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Standing Low

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The standing inventory of residential properties currently for sale is staggeringly low.

The number of active properties for sale is almost 90% below the average for this time of year.

In Metro Denver, there are 1,144 residential properties for sale today.

In Larimer County, there are 136 and in Weld County there are 174. 

Current inventory along the Front Range is essentially half of what it was one year ago.

The low standing inventory bolsters our belief that nothing resembling a decline in housing prices is on the horizon.  The low supply will continue to put upward pressure on prices.

It is time to register for our annual Market Forecast with Chief Economist Matthew Gardner.  This year the event will be hosted online on Thursday February 3rd from 11:00 to 12:00.

You can register at www.ColoradoForecast.com

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Price Matters

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Almost twice as many sellers now have to drop their list price before a sale compared to July.

In October, 19% of all sales were forced to drop the list price before receiving an offer.  In July it was 10%.

These properties that start out priced too high end up taking four times as long to sell compared to those that are priced right on day one.

The bottom line is this- price matters even in a strong market.

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