2018 Predictions for the Grand Junction Real Estate Market

Dave,

I know you have answered this question before, however I would love to hear your answer—so hopefully I’ll be the one to ask it this year. What are your real estate market predictions for 2018? I’ve seen several news stories throughout the year that new construction in the valley appears to be booming. Do you think it will continue in 2018? What other market trends do you think we’ll see?

Cheers to the New Year!
Doug, Grand Junction

---

Doug,

Cheers to the New Year is absolutely right, but also cheers to last year! 2017 was the best real estate year we have seen (in number of sales and total sales volume) since 2008! It is hard to believe that 2008 is nearly 10 years in the rear view mirror…I remember in 2010 lying awake at night and wondering if the misery would ever end, but end it did and the future of the Grand Valley is bright! 

A quick recap. In 2017 we consistently saw sizeable market gains (price increases) and low inventory levels in the under $350k housing market and much of this upward push was driven by new construction. When all the final numbers come in, we will see construction numbers come in at least 30% higher than last year and the majority of the new homes being built are in that under $300,000 price range. Don’t be led to believe that all the partying was done under $350,000, we even had some fair to modest gains in the higher end homes (those between $400-$700k). The inventory of homes over $700k is still moving slow with few buyers really working those upper end price points. Keep in mind that I believe there is a “trickle up” effect in our housing market, meaning as our market gains strength in the lower end price ranges it will slowly build up the higher priced homes over time. The upper end will come back, but only as the strength in the market is built and sustained from the bottom up. We also saw the demand for investment properties, residential or commercial, really build some solid momentum and this segment continues to remain very active with good properties in high demand.

In 2018 I believe…

1. We will continue to see the entry level price ranges (under $300,000) remain very strong with low inventory levels that require buyers to be very aggressive and competitive when buying. This segment of the market will remain strong as our jobs and wages fuel these entry level price points.
   

2. We will see the upper end home market continue to post modest increases and gain incremental sales growth year over year. As more people move in from booming markets, they will be willing to open up their pocketbooks for nicer, more expensive homes.
   

3. We will see new construction play a larger part in the market as we are on the cusp of having a robust inventory of lots. These lots will emerge from the development process between July of 2018 and July of 2019. While lots are hard to find now, choice will soon be much more plentiful with ample choices for buyers. I believe this will lead to a leveling off of lot prices and hopefully will open up some new home opportunities below $200,000. We need more affordable housing options.
   

4. We will see the demand for investment properties remain strong! As the stock market surges to a new record level every month, many investors will seek a safer haven and I believe that safer haven will be real estate.
   

5. We will see interest rates climb a little, but will still be between 4.5 & 4.75% by year's end and have little to no impact on the housing market.
   

6. We will see that the secret of the Western Slope is getting out. Our area is going to get more and more popular! As big cities boom and people become exhausted with all that large metro areas entail, the lure and appeal of a slower pace of life paired with an incredible outdoor lifestyle will prove too attractive for many to pass up. Like in the movie Field of Dreams, build it and they will come…trust me, they will come!

I realize I am not stepping out on a very high ledge, but ultimately I believe our immediate future (baring some unforeseen world event) is very bright! We are blessed to live in one of the best places I have ever been. Every time I go on vacation to somewhere “amazing”, I come home and realize that we live somewhere “amazing”. The word is getting out. Buckle up and enjoy the ride!

Happy New Year,

Dave Kimbrough 

Have a Question? Ask Dave!

Are we in a buyers' or sellers' market?

Dave,

We’ve heard that the market is hot for sellers right now and that enticed us to start thinking about selling our home…but we’ve also heard that there’s a shortage of inventory—probably why the market is so hot for sellers right now.

Is this truly how our market is right now? If it is, that makes it a little bit of a double edged sword for us. Should we sell and make great money off the equity we have in our home? But if we do, will we be able to find another house that we like if there’s such low inventory? What do you recommend in a market that’s like ours is now?

Donna and Frank, Grand Junction

---

Donna and Frank,

Great question! Our market is the tale of two markets…those properties under $300,000 and those properties priced over $300,000 (particularly those properties priced over $400,000). First let’s look at the absorption rates we currently have in the market. You may ask, what are absorption rates? Well, the absorption rate is the number of months it would take to sell all the currently listed homes in the market. This is where we get months of inventory and that number is important as it helps provide a clearer picture of just how much inventory is available in any given price range and theoretically will allow you to better predict future trends in pricing and sales activity. I have heard it said that a healthy market is somewhere between 3 and 6 months of inventory! Less than 3 months of inventory lends itself to being a seller’s market where the supply is short and the demand is high. More than 6 months of inventory would mean you are entering a buyer’s market, meaning more inventory than there is demand and the buyer theoretically holds the upper hand in negotiating power.

As of October 1, 2017 properties priced between $100,000 and $300,000 had 3 – 3.5 months of inventory, thus putting us in a very brisk market that is starting to really favor sellers. For properties priced between $300,000 and $500,000 we have 5.5 – 7 months of inventory, thus entering that area typically favoring the buyer. Note that there is not much in between! All that being said, we have a very brisk lower end of the market, a softening middle range and a “cushy” soft upper end (homes priced over $500k) where we have somewhere between 10 and 20 months of inventory. All that being said, overall the market is as solid as we have had since 2008 and we are no doubt going to see the strongest sales figures, across all parameters, we have seen in nearly 10 years! It has been amazing and we should all be very thankful to have 2009-2012 well in the rear view mirror! 2017 has been an incredible year for housing and I fully expect 2018 to continue this trend, albeit maybe with a little more pressure on the gas in the lower end price ranges.

“You are most likely correct about the “double edged sword”, because when you sell and buy in the same market everything is relative! This means that if your home has gone up 10%, then so has the home you are likely to replace it with.”

You are most likely correct about the “double edged sword”, because when you sell and buy in the same market everything is relative! This means that if your home has gone up 10%, then so has the home you are likely to replace it with. The exception to this in our market is when you are making a significant move up, let’s say from $350,000 to $550,000. If you are making that kind of move up, sometimes you can make up a little ground as the lower priced home appreciation has outpaced the upper end for quite some time. Low inventory is an issue and the good ones generally sell quickly. If you are pondering a move you need to focus on being flexible, as perfect timing can prove as elusive as a Sasquatch sighting! Be prepared to sell and then rent or have somewhere to burn a little time in between properties if the timing does not work out perfect. You might consider looking at new construction, as this provides you the ability to plan as you attempt to “time” the events of selling and buying!

I find, time and time again, selling and buying are a lot like life! It will be what you make of it!  Everything might not work out perfect, but really what does? Jumping a few hurdles is generally a good thing and it makes you appreciate the smooth times even more! Go ahead and jump in feet first, the water is only really cold for the first few seconds!

Dave Kimbrough
The Kimbrough Team

Have a question? Ask Dave!

What's the best strategy for buying investment properties in Grand Junction?

Grand Junction Real Estate Advice

Dave ‑

I have about 150K that I am wanting to invest in a rental property. I was all set to find my property and my realtor suggested that instead of buying the property with cash, that I use that money to buy several properties which I would have smaller mortgages on. I really don't like the idea of taking on any mortgages but I want to make the most of my money. What is your advice?

Jarred, Grand Junction

---

Jarred,

Great question!! I will start by applauding you, looking to purchase investment properties right now to diversify your investment portfolio is a great idea!

To assess which is the best route for you and your family, you must determine what your long term goals are and how much risk you are comfortable with. I do not believe there is a right way and a wrong way to purchase investment properties, just different ways. There are two ways to look at the purchase of your properties and that is either to purchase with cash, which is the route that presents the least amount of risk or purchase with a mortgage which will introduce some limited risk.

To make a cash purchase makes great sense, because it creates an instant income source. If you need to quickly generate income, then a cash purchase is the best way to proceed. When you purchase with cash, and therefore have no mortgage, you also remove the risk of market rent fluctuations, because you can easily “go with the flow” and adjust to any potential rent changes. Also, with no mortgage you should be able to easily weather a month or two without a renter. If your risk tolerance is low or you need to generate month to month income, cash is your way to go.

“On the other hand, if you take your $150,000 and put $75,000 down on two properties then you have doubled the long term investment potential of your $150,000. ”

On the other hand, if you take your $150,000 and put $75,000 down on two properties then you have doubled the long term investment potential of your $150,000. This should still “cash flow” nicely for you and allow you to have room if there are rental market fluctuations. This will allow you to take advantage of the favorable market and also take advantage of low interest rates that remain historically low. You will be somewhat leveraged, but if done correctly and thoughtfully, and as always with the help you’re your accountant, you should be able to create a wonderful long term return with a little, but limited risk. Make sure to plan it out, be deliberate, but be ready to act when the right thing comes up!

The best thing here: you are taking positive steps toward your goals, thinking things through and are willing to look at all the angles to make an informed decision!! Reaching for your goal, is the first step in obtaining it!! Great job. Feel free to call if you need further information.

Dave Kimbrough
The Kimbrough Team

Have a question? Ask Dave!

Should you sell your home this fall or wait until spring?

Grand Junction Real Estate Advice

Dear Dave,

I am thinking about getting my house on the market but I have a couple of questions for you before I do that. First, if I'm not ready to put it on the market for another 30 days, is that going to be too late in the year? If it were you, would you put your home on this fall or just wait until the selling season in the Spring again?  Secondly, what are the 3 most important things for me to do to get the most money out of it when I do sell?

Mike, Fruita

---

Let me start by saying that you should never put your home on the market until you and your home are ready. You need to be ready, emotionally, and your home needs to be in the proper condition for market. If you are not 100% ready and committed to selling then don’t put it up and make a halfhearted effort. That being said, you must also have your home in the best condition it can be in. Top tier condition can make all the difference between selling and not selling. Put in the effort to make is sparkle.

Too late to sell? Traditionally our market stays active into late October and even early November, depending on the weather. If it gets cold early, the market can slow a little earlier. We are coming off a very good summer and I fully expect home sales to remain good through the fall. Once we get to November, things do change, but typically you have far less competition and I often urge my sellers to remain on the market over the winter when many would be sellers are tired and give up for the winter. Homes do sell during the winter, we often have good winters, because we are taking advantage of the lesser inventory and know that when we have less competition our odds of selling go up! : ) Does the market slow down during the winter? Yes, but don’t fall into the “nothing sells during winter” mentality, it just is not true.  

I do not have a crystal ball, but I do not believe that waiting until the spring of next year will cost you money on the sale price and in fact it could make you a little money. I do not anticipate any significant upswings, but I do anticipate good appreciation to continue in the near term. I will add that there are sooo many variables and trying to predict how next spring will perform is a crap shoot, at best. Act on the now and if the time is right for you to sell, give it a go!! Does it matter to you if you sell in November or April? I bet not, so get it on the market.  You do not want to miss the perfect buyer in November, because you waited.               

The 3 most important things you can do to maximize your money?

1. Make sure it is marketed properly, with a clear marketing plan and an accurate pricing strategy.

2. Make sure your home is in tip-top condition (inside and out) and don’t put it on the market until it is ready.

3. Accentuate your properties positive features, appeal to the right buyer!

Try to get your home ready and on the market as soon as you can and take advantage of the early fall market. I bet you can get it sold and be moving on to the next stage of your life! Best of luck with your home sale.

Dave Kimbrough
The Kimbrough Team

---

Have a Question? Ask Dave!

Houses in our $225k price range are moving so fast! What can we do?

Dave,

We are currently looking for a new house here in the Grand Valley. Our budget is around $225,000 and it seems like every time we find a house we want to see, it’s under contract before we can even schedule a showing! We just got our house under contract and are feeling the pressure to find something new pretty quickly. What’s the deal with houses in our price range moving so fast? Do you have any advice on what we can do to find something we like before it goes under contract?

Thank you so much for your help!!
Mackenzie & John, Grand Junction

---

Mackenzie & John,

Wow! Your observations are absolutely correct! The segment of the market that you are searching in is moving at a very brisk pace and the competition can be fierce! I had a property that I put on the market this week and had 3 offers on the first day and the winning bid was significantly over our asking price. I sure did not see that coming! However, situations like this are happening with more and more regularity so as a buyer, you must be ready and willing to put your best foot forward right out of the gate. Don’t be afraid to compete!

“These are several techniques to help you up your game in this increasingly more competitive real estate market. ”

There ARE some simple things that you can do to help move your offer up in the pecking order when the offers are presented to the seller!

1. Be willing to offer more than asking price! I have seen many an offer lost over $500 or $1000. If you really want the property and there are multiple offers, go 1-2% over asking price and watch your chances soar! If the home is $225k, offer $229k and my bet is you get it.
    
2. Offer more earnest money than what the seller is requesting. Earnest money is often times an overlooked negotiating tool that absolutely DOES mean something to a seller and can tip the scales if the offer prices are similar.
    
3. Be flexible with the closing and possession date. This will show the seller that you are willing to work with them and make the transition fit their needs.
    
4. Be willing to cover your own or at least part of your own closing costs. Over 80% of the offers we see contain seller paid closing costs. Eliminating these closing costs indicates to a seller that you are a stronger buyer. After 15 years and thousands of contracts negotiated, it is a fact that most sellers don’t like paying the buyers' closing costs.
    
5. Do not ask for personal property or things that the seller is not offering as inclusions with the property. If they have not included the nice new looking refrigerator, don’t ask for it. If you find their lawn furniture comfy don’t try to throw it in, go buy your own. I have yet to find a seller who looks upon request for personal property with a favorable eye.
    
6. Be willing to waive your inspection contingency! If you do this, it will be clear to the seller that you are making a serious offer and have serious intent to purchase the home. This is a last resort move, however, it is a doozy if you have confidence that the property is in good condition.

These are several techniques to help you up your game in this increasingly more competitive real estate market. Notice that none of these are high dollar techniques or anything really fancy, but I promise they will make a difference and if you combine 2 or 3 of these in the same offer you will probably have an unbeatable combination. 

Remember sometimes it takes a little courage, faith and risk to get what you want so don’t let fear or hesitation hold you back from making things happen. When you craft your offer with your agent, look at it through the eyes of a seller, be willing to think outside of the box and create a win/win for both parties and I bet you have a new home in no time at all. I’ll bet the next time you submit an offer, it will be FUN! Good luck.

Dave Kimbrough
The Kimbrough Team

Read more Ask Dave!