Recently it seems there are many attempted comparisons being made between today’s real estate market and the 2006-2007 market.
It seems that people fear a repeat of what happened to the market in 2008 and 2009.
Buyers, understandably, want to make smart decisions and don’t want to buy in advance of any downturn.
The reality is this. There are some similarities between now and the pre-bubble market of 15 years ago. Namely, prices are appreciating quickly.
However, there is one massive difference.
The inventory of homes for sale right now is drastically different than 15 years ago.
The rules of economics tell us that, in order for prices to crash, demand needs to diminish, supply needs to swell, or some combination of the two.
Here’s the deal. Supply today is a fraction of what is was 15 years ago.
Homes for sale today:
- Larimer County = 238
- Weld County = 226
- Metro Denver = 2,594
Homes for sale 15 years ago:
- Larimer County = 2,998
- Weld County = 1,113
- Metro Denver = 29,045
The reason why prices flattened and decreased slightly along the Front Range in 2009 is because the National economy had a meltdown and there was a glut of supply.
We do not have anything similar to those same dynamics today.
We are watching the market closely every single day. While we don’t expect the current pace of appreciation to keep up, we believe inventory levels keep us insulated from any kind of crash.