…2021 was (in degree). Will 2022 just be 2020 too?
Let’s hope not. But, as of 01/01/2022 there are some unsettling similarities. Most New Year’s Eve public celebrations and many private ones were cancelled. New Year’s parades too. Many schools may not reopen following the holiday break. We’re discouraged from gatherings of friends and family again, and masks are mandatory inside many businesses and government facilities. Businesses are severely short-staffed, and supply chains remain critically strained. At least there’s plenty of toilet paper! We’d hate to have to suffer through THAT crisis again! Seriously though, by mid-2020 we had prepared ourselves to weather the storm, though fully expecting this storm would pass in another 6 or 9 or, worst case, 12 months. Not only did it not pass, but the constant twists and turns continue to affect us in many unexpected ways, including rampant inflation and a super-heated housing market.
This frenzy caught everyone off guard, including those of us that track market signals very closely. Ultimately, it made sense that the stay-at-home mandates with ramped up work-from-home protocols and online-only schooling, along with super-low interest rates, would incent many to alter their housing situation. The already low inventory and increased home (and rent) prices accelerated that buying frenzy by regular homeowners and investors alike. We also became increasingly aware of the growing constraints on home builders to build affordable homes. By that I mean to build homes at or below the quickly rising median price for the area. Labor shortages, city and county staff shortages, increased regulations and restrictions, not to mention neighborhood resistance to adding more housing all exacerbated the problem significantly. So, the housing challenges that became elevated in the first year of the pandemic, increased in the second year, and with the reactions so far to the 3rd variant of Covid-19, it appears that 2022 will bring more of the same.
The big question is, what will be the tipping point that will cause Colorado residents and immigrants to hit pause on these high home prices? With labor shortages fueling wage increases, that are quickly gobbled up by inflation, which is further fueled by the rising cost of labor, it’s truly anybody’s guess. I read and listen to many business news sources and I hear many more questions than believable answers. I disregard the doomsayers and the Pollyannas that have no data-based logic to their positions. They just love the attention, and they are always piping up! It seems that the only solution to the lack of affordable housing for the current work force in the Denver area, including the foothills bedroom-communities, is higher density housing, never mind that everyone hates that including those who are forced to live there, absent other affordable options. Although the regulatory red tape and over-reach could be taken back a few notches too, without sacrifice of environment or safety. That would be helpful.
Quality of life and practical necessity have never been great bedfellows, hard as they may try. But try we must, because the restaurant waiter, the clerks at our local shops, the trash removal folks, and even the lower-level white-collar professionals need a home they can afford, in the community where they work, that nurtures and accommodates their families. And they won’t commute from Commerce City because there are plenty of open jobs down there too. So, ask yourself this, if the Statue of Liberty where being placed where Mother Cabrini’s Shrine is now, would you protest those wanting to move up here, or open your arms and try to accommodate and help them fit into the community. Both sides of the growth and expansion issue have valid points, indubitably! There are no easy answers so the most responsible thing that we who have an opinion about it can do is, FIRST LISTEN to all the FACTS (often hard to distinguish) on the subject, and then register our heart-felt and intelligently considered opinions and SOLUTIONS to the issues. That is called being a part of the solution vs. part of the problem. It’s a tall order in this time of divisiveness and frustration, but hey, I was born tall! For most of us this only requires that we keep our minds open to even that which we don’t want to hear, and think before we speak, especially on whipped-up social media. Ask more questions and only accept answers that are verifiable. Apologies for the soap-box speech.
In the meantime, housing in 2022 will remain scant and prices will continue to rise. It is fully expected that the Fed will raise rates at least three times this year and possibly four. That will, in the interest of curbing inflation, only diminish home affordability further, and then eventually slow the demand so that supply can begin to catch up. But I expect it will be 2023 before things level off in any significant degree. That is in my humbled though studied opinion. If you are considering a move to another market area where prices are lower than ours, this would be a good year to do that. If you are in a home WAY to big, just note that when the market does soften, the high-end homes and the homes in lesser desired locations will soften first. For buyers, waiting for the market to cool is a losing proposition because prices are continuing to rise, and so are interest rates. You decide what of this is good or bad for you and what’s your best next move.
Well, that’s plenty for this month, or as my editor always tells me, too much! But thank you to my loyal readers. And I always appreciate your feedback. Wishing you forever, Happy Homes.