When you check into the latest real estate listings in CentennialCherry Hills VillageGreenwood Village and Parker , you come away with an accurate snapshot our current market. But when you are thinking of the future, and where values might be headed, it’s also useful to think nationally.
Useful, yes: but careful! There is a tendency to mentally equate the equities market averages – Dow Jones, S&P, Nasdaq – with the real estate market. They are certainly related: one of the causes of the 2008 Dow plunge was the collapse of the subprime mortgage market, which led to the glut of foreclosed homes in real estate listings. Yet, the two markets are far from identical.
According to Yale University professor Robert Shiller, the number one driver of the value of real estate listings is momentum. If the prices of homes are following an upward trend, they are not likely to head into a sudden crash. The stock market is much more susceptible to rapid run-ups and downturns. When there is a great deal of volatility in the stock market, consumer confidence might experience a dip, which might in turn cause a drop in home sales – but disregarding the time differential would be a mistake.
Shiller also points to a second key driver of the real estate market: the unemployment rate. When the UE rate is high, people are less likely to buy homes -- so the prices you find in the real estate listings tends to drop. A long-term bear market can itself create upward pressure on the unemployment rate, since companies hesitate to spend precious capital on hiring new employees. Yet, when that trend reverses, employment rates may improve ahead of the curve.
Another takeaway is that while the stock market does not directly correlate with housing prices on your street, consumer confidence levels can. It is most realistic to be aware of all the above factors – especially the true relationship between the equities and real estate markets -- when developing a home pricing strategy.
Want to hear more about what is influencing real estate listings in the Denver Metro Area? Give me a call; I’m happy to share the latest knowledge about local market conditions as we head into the December, January, February selling season!
Jason Peck is part of the Carr & Peck Real Estate Experts at Coldwell Banker. He has been recognized locally and nationally as in expert in real estate. Locally he is 2nd in Denver Metro sales out of 5,000 agents and has been recognized by the Wall Street Journal and Real Trends as one of the top selling agents in the country. He is a top 10 agent for Coldwell Banker nationallyin homes sold. He is co-author of the National Best Selling Book, “The New Rise in Real Estate”. For more information feel free to contact him or call 720-446-6301.
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Author:Jason Peck Phone: 720-446-6301 Dated: December 6th 2012 Views: 1,546 About Jason: ...
Recognized as a top selling team in Denver Metro area. Nationally recognized for homes sold by the Wall Street Journal, Real Trends and Top 5 agent by RIS Media. Our goal is simple and that is to exceed our client's expectations by providing professional service, expert advice and exceptional results.
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"We worked with Karen Venier for a relatively short time for a good reason: our home sold at full price within hours of hitting the market! While it’s true that the Denver housing market is “hot,” credit for the speed and ease of our transaction belongs to Karen. She was great to work with, giving us perfect advice about readying our home for sale and then expertly guiding us from offer to close. Along the way, we came to appreciate Karen for her skillful blend of professionalism and personal touches – like dropping off our favorite beverages during a particularly stressful time in our move or shoveling our driveway in subzero temps after we’d left the state (way beyond the call of duty!). Now that we’ve relocated to Wisconsin, we keep saying that we wish Karen could be our buyer’s agent here. Since that’s not possible, we’ll shout her name loudly to whoever might be looking for a home in the Denver area.
Thanks for the great work, Karen!