Showing Trends Show 2021 Still Higher Than Previous 4 Years

 The Denver House Guy Lesson of the Day:

What Showing Trends Teach Us About Demand

(Click to enlarge)

This very interesting showing graph showing the amount of showings per listing. 

2021 is still averaging much higher showings per listing than the previous 4 years, even in 2020. 

This shows that demand is even higher than supply in 2021 than in 2020, or previous years. 

No bubble in sight, no crash in sight. 

Supply and demand are the crystal ball of real estate! 

When was it more affordable to buy a house: 1977, '81, '90, '06 or 2021?

 

Check out this Time Magazine cover from 1977 (that looks like it could very well be from today!):

Keith Weinhold had a great article on affordability throughout the years. Housing inventory and affordability is not a new problem in the United States. Just ask your parents and grandparents how much they stretched (not paid) to buy their new home. 

In 1977:
The median housing price was $48,800. 
BUT, 1977's median income was less than $14,000. 
AND mortgage interest rates were 8.9%, only to go up to 18% in the 80's!😱

Today, many people think that the price of housing has become high again.

But we need to understand housing affordability in the context of "consumer house-buying power."

First American's Real House Price Index helps. It shows that today's real house prices are now 42% below the 2006 housing boom peak. Wow!

It considers 3 big factors of:
-today's nominal house price,
-today's household income
-today's mortgage interest rates.

Basically it is more affordable to buy a house today than from 2000 to 2008:

 

Today's "nominal" house prices are well above the housing boom peak, but real, house-buying power-adjusted house prices remain 42% below the 2006 housing boom peak! 

House-buying power has benefited from a long-run decline in mortgage rates and the slow, but steady growth of household income. Since the housing boom peak in unadjusted prices in 2006, the average 30-year, fixed mortgage rate has fallen by approximately 3.3 percentage points, from 6.32% to 2.98%. Over the same period, nominal household income has increased 55%. The dramatically lower mortgage rates and higher income levels mean home buyers in June had 129% more house-buying power than in 2006. House-buying power matters because people buy homes based on how much it costs each month to make a mortgage payment, not the price of the home. (credit Keith Weinhold and First American)

This Chart Will Blow Your Mind!

This amazing chart is a historical index comparing monthly mortgage payments dollar for dollar by year since 1969! Which means that dollar for dollar today the monthly principal and interest mortgage payment is only 48% of what it was in January 1990! And only 26% of what it was in 1981!😱🤯

Denver Adjusted Home Price Index, showing prices when getting mortgages are really only $300k in apples to apples comparison with what interest rates and prices were in 1990! 

Adjusted for Inflation, Denver prices are actually only $290k:


Bottom Line: Yes house prices have gone up, but so has affordability and buying power because of record-low interest rates and higher incomes.