Yesterday was quite the day on the stock market. Down around 300 points, reporters are now tossing around the word “recession” like it’s a foregone conclusion. Even the Presidential race is taking on the economy as a more pressing issue than the war.
What does news like this mean for the Denver real estate market? I’m guessing that we have another 18 months of increasing inventory, flat to decreasing prices, and continued foreclosures and short sales.
The truth, however, is that people will always need to buy and sell houses for one reason or another. The possible economic downturn does not mean the bottom will fall out of our local real estate market, rather I believe it means more of what we’re currently seeing, for longer than we initially expected.
It may be a good time to get into the market if you are a real estate shopper looking for a home to live in (as opposed to invest in) then you will find lots of inventory with really good prices. My advice is that you should be buying for the 7-year range at a minimum.
This is important: unless you are a professional you should not be purchasing homes to fix and flip. I’m seeing a decrease in the number of first-time investors who want to give fixing a try. and I’m advising the first timers that I do speak with to rethink their plan entirely and to sit things out for now. There are, however, lots of professionals making a living fixing up homes and selling them. But these are pros. The ones I am seeing are small operations who do much of the work themselves, with low overhead and a realistic sales price and time frame as an exit strategy. You need to have cash on hand to sit on your fixed up house for a longer period of time than in years past. The ones who realize this and can keep ALL of their costs down are still making money in this climate.
But there is also disturbing evidence that investors continue to make the worst rookie mistake possible: running out of money. Not a month goes by where I don’t show at least a couple homes that are half-way fixed up. Possibly on their way to a short sale, evidently because the owners ran out of money right in the middle of a fixer.
If you are buying for the mid to long term then you will find a great market and many prime buying opportunities. But investing is another story. Like Aretha says- you better think. Think before you make a huge gamble in this market.