ook up any Castle Rock real estate statistics, and you’ll see a booming town. More residents, more shops and restaurants, and more construction for those new residents. Since the recession of 2008, Castle Rock has seen a steady climb in new development and a growing population but is there a shift coming in the Castle Rock real estate market? Let’s discuss some evidence that the market may be turning in Castle Rock.
Castle Rock Real Estate Market Conditions
New Construction Killing Pre-Existing Homes
Castle Rock has seen an explosion of new construction with several new condos and single-family homes popping up from downtown to the far reaches of suburbia. The more new building, the less interest there will be in the pre-existing home market. New construction makes sense for prospective buyers, who wouldn’t want brand new? However, the influx of new construction is making it tough for the pre-existing market.
Too Many Properties
After several years of housing shortages, Castle Rock may now have its plate too full to continue the competitive market seen in recent years. Basic economics tells us that demand grows as supply decreases, but the recent influx of new construction has climbed while demand has slowed. Ideally, new construction units are filled before the construction is finished, but a slowing market has new units gathering dust instead of welcoming new owners.
Builders Offering Real Estate Commissions
In most new construction the builder has a dedicated real estate team or sells units directly to property management companies. When things slow down, and builders can’t fill new units they’ll reach out to local real estate agents and offer commissions to help move their property. This is already happening in Castle Rock. When builders reach out to third-party agents, the market might be turning.
Too Many Choices Waters Down Market
Too many real estate choices weaken a local market. Unfortunately for sellers, that’s what’s unfolding in Castle Rock. For the past several years, a low inventory has kept the power with home sellers, but buyers have more control in a watered-down market filled with choices. Power is still in the seller’s hands for now, but continued construction and increased availability of pre-existing homes could soon change that.
Multiple Offers Slowed in 2018, Limited in 2019
Numerous offers are one way realtors, and real estate professionals monitor markets. When inventory is low homes are more likely to have multiple showings to several prospective homebuyers. The more multiple offers there are, overall, the hotter the market is. Unfortunately for potential Castle Rock sellers, multiple offerings slowed to just 550 homes in 2018.
Numbers are still coming in for the early months of 2019, but trends suggest the number of multiple offerings will continue to slow, especially for the pre-existing market. The addition of more condos and single-family homes will continue that trend. A few years ago, sellers could sort through several applications and offers to find the perfect match, but with multiple offers slowing, sellers will need to take more care with individual prospective buyers. The days where you can toss a home on the MLS and expect dozens of showings might be over in Castle Rock. If you and your real estate agent miscalculate prospective showings and offers on your pre-existing home, you could be in for a long selling process.
Interest Rates Limit Purchase Power
The first few years after the 2008 recession saw the lowest borrowing rates in several years. Now that the economy is on a healthy path, those rates are slowly creeping back up, which can make a significant impact on your home purchase. A 1% increase in borrowing rates equals a 10% loss of total purchasing power. As rates climb, more people will reconsider upgrading their homes or moving down the street, which will further slow the real estate bubble in Castle Rock.
Nothing Gold Can Stay
Any home in the Denver metro is still a hot commodity, and for now, the power in Castle Rock real estate remains with the seller. However, there are many signs the market could slow or turn into a buyer’s market with new construction, a watered-down market, and increased interest rates. Talk to a local real estate team in Castle Rock to make the right decisions on buying a home now or when the market turns.