Last week, I did a survey of my readers who are real estate pros in Colorado (realtors, bankers, title companies, appraisers, assessors, etc…) to see the impact of the midterms on Colorado real estate. The graph above was not initially profound, but did make me wonder are the real estate pros wrong and is there a likely scenario where prices actually rise?
What do real estate pros predict for Colorado real estate prices?
The overwhelming majority felt that Colorado real estate prices would fall from where they are today which leads me to wonder how accurate this assumption is.
Here are the results of the survey:
- Prices rise- 15%
- Prices stay flat- 33%
- Prices Fall: 52%
Are Colorado real estate pros correct on predicting a decline in prices?
After reading through some of the comments, I’m going to go against the crowd and change my thinking. Here is one quote that changed my thinking: “Supply will be choked with the new political electors and progressive movement of this state.”
As I thought about this quote, we have seen throughout Colorado a huge shift on energy efficiency, land use regulations, new fire regulations, etc… All of these items together will add substantial costs and substantial time to building new units. This means that supply will be dampened substantially throughout Colorado.
Along with build costs, regulations, etc… the other big factor is interest rates. Based on the political climate interest rates likely will stay higher for longer which further reduces supply as builders and lenders do not want to take the risk of building too much in a high interest rate environment.
Long and short the huge shift left in Colorado coupled with national politics driving interest rates higher will have profound impacts on upcoming supply throughout Colorado.
Will real estate demand in Colorado fall due to the election?
We all know that there are two primary variables to prices: Supply and Demand. From above, I feel pretty certain that supply will be reduced going forward. This leads us to the next question, will the election change the demand picture for real estate. When I look back at the comments from the survey, there was an underlying theme.
Here is a good quote that sums up the demand question: “Higher taxes will cause existing businesses to move elsewhere and new businesses to find other states to set up shop, resulting in tepid job growth and therefore lower demand for housing. It won’t be cataclysmic, but it will be enough to have a negative effect on real estate.”
Will real estate prices in Colorado rise because of the election?
The million dollar question is will the supply fall more than the demand. My gut says that supply will fall considerably more than demand leading to possibly rising prices best case or flat prices as demand and supply come better into alignment.
We are already seeing a flat to slightly declining population in Colorado. The wild card is if the super majority in the legislature passes even more laws that makes businesses move more than anticipated or more people move due to the high expenses.
Was the recent Colorado election good for real estate?
Unfortunately I don’t think long term the raising of taxes is good for the state of Colorado and in turn real estate. But, ironically there is a likely scenario of rising prices as a result of a huge pullback in business and investment in the Front range coupled with rising build costs that will lead to huge supply reductions.
The irony is that this election in Colorado will ultimately increase costs on everyone with the lowest earners shouldering the largest burden as there will be little if any building at the lower price points. My gut is saying flat prices is the most likely scenario with a “stuck” market with equal probabilities of rising or falling prices. We will get to wait and see how this all shakes out over the next several years.
Where can I find additional information about Colorado real estate prices?
- https://coloradohardmoney.com/colorado-election-results-impact-on-real-estate/
- https://coloradohardmoney.com/will-denver-real-estate-prices-rise-or-fall-next-year/
- https://coloradohardmoney.com/colorado-real-estate-sales-plummet-28-will-prices-fall-off-a-cliff/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. He is the owner of Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Glen resides in Colorado, lends in Colorado, owns property in Colorado, and services loans in Colorado which provides a unique real estate prospective of what is actually happening on the ground both in Denver and throughout Colorado. My goal of this real estate blog is to provide an honest assessment of what I see happening in Colorado real estate and how it will impact real estate owners, buyers, realtors, mortgage professionals, etc…
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