Home Price Drivers Still Strong


Increasing home prices have been a double edged sword for many of us.  If you own a home, it’s nice as you are gaining equity as your home value grows.  For those looking to buy or move; rising prices can prevent you from buying the home that you desire. Regardless of your current position, all signs lead to the fact that this reality is not going to change for some time.  Included with this post are two Bloomberg News Articles that detail the logic for our current pricing and that pricing will continue to see stronger than average growth in coming years.

The main points of these stories are that we have multiple pricing pressures driving this market.

The first is Supply to Demand.  This has been an on-going theme since the fed lifted financing restraints after the “Great Recession” that was compounded due to the Fed’s original restraints to deal with the subprime debacle.  So simply said, we had limited financing for several years which created a log jam on Demand; then the log jam was released while at the same time more logs were coming in.

The second is the cost of new construction is higher now more than ever – materials and labor costs determine new sale pricing; and as long as Demand is greater than Supply, the new home prices will continue to grow.  In East Boulder County, new homes are coming in at an incredible volume.  Thankfully so, as it has helped to absorb a level of demand, but the new builds are also pushing price per squarefoot higher and helping resale homes justify higher and higher prices.

So for you homeowners – this is all good news.  For you that are looking to buy, it’s time to accept these economic factors and get in now as pricing drivers will not be letting up any time soon.