Denver market update
Denver Metro Single Family Housing Stats:
Active Listings: 8,854… Down 37% from Dec. ‘10
Under Contracts: 2,253… Up 6% from Dec. ‘10
Solds: 2,531… Up 5% Dec. ‘10
Average Price: $275,610… Even from Dec. ‘10
Average Days on Market: 107… Down 4% from Dec. ‘10
Denver Metro Condo Housing Stats:
Active Listings: 2,139… Down 50% from Dec. ‘10
Under Contracts: 579… Up 3% from Dec. ‘10
Solds: 625… Up 4% from Dec. ‘10
Average Price: $166,420… Even from Dec. ‘10
Average Days on Market: 106… Down 20% from Dec. ‘10
Real Estate News (courtesy of Your Castle Real Estate)
The big headline these days in the Denver real estate market is the massive drop in inventory (homes for sale) over the past couple of years. In December, 2007 there were 27,127 homes and condos on the market in metro Denver. As recently as December, 2010 there were 14,275 properties on the market. Today there are only 10,993. We have to go all the way back to 1999 to see inventory this low. This massive drop in inventory in the under $300k market segment has profound ramifications for our local real estate the market.
Let’s start with a simple supply and demand discussion. Supply = the inventory of homes on the market. Demand = the number of buyers looking for homes. Currently, supply is at a 12 year low. In 1999 when supply hit its lowest point in a decade, prices began rising simply because supply couldn’t keep up with demand. Prices rose for about 8 years until inventory reached over 27,000 properties in 2007. At that point in the housing cycle supply surpassed demand, causing prices to begin to fall. Simple economics.
Compare the 1999-2007 housing cycle to today’s environment. We currently have a 12 year low in inventory – just as we had in 1999. As in 1999, there is simply not enough inventory to keep up with demand. When I work with buyers we have to look long and hard to find quality properties. This is very different from a few years ago when supply was high. Sellers are starting to understand that the tables have turned (in the under $300k market) and are holding firm on prices and bargaining harder on concessions and inspection items. The market has changed and we have to be quick to adapt.
The imbalance between supply and demand has already affected the market. In the past 12 months the price of homes under $85khas risen a massive 19%. Homes between $85k and $135k are up 10%. Homes from $135k – $210k are up 6%. It’s only when you get to prices above $300k that prices are still dropping (down 13% for homes priced above $460k).
As we discuss every month, the key to buying or selling a property successfully is to understand what the market is telling us. Right now it’s telling us that there are not enough homes on the market in the under $300k segment and the market (i.e. sellers) is responding rationally to this change. Please feel free to call me to discuss this further and see how you can make this market work for you.