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How's The Market in Denver?

By
Real Estate Agent with Kenna Real Estate Company

Exciting, yet challenging!  We can now say it is exciting because Denver is on the upswing of the housing market and the next 6 monhts will be better than the last 6 months in closed transactions.  It is challenging due to financing guidelines that are more difficult to navigate and 3rd party sellers (banks) have little emotion in the sale of a property.  Sometimes it seems they don't care if they get a house sold quickly or at all!  Although they really do care.  Let's take a look at the facts.

Inventory

2004, June - 28687, July - 28581

2005, June - 26504, July - 27211
2006, June - 32416, July - 32971
2007, June - 30145, July - 30902
2008, June - 27295, July - 26864

What does this inventory decrease mean to the marketplace?  In most summer months inventories typically rise through August of each year.  In 2008, the marketplace is seeing a reduction in the inventory, which will lead to fewer available properties for buyers to choose from.  This is something I am already seeing as I search for properties for buyers.  This phenomenon will cause buyers to start to buy at a faster pace in the coming months, as evidenced by the number of homes Under Contract in 2008.  This inventory decrease is a true sign the Denver residential real estate market is starting to move in an upward and positive direction. 

Under Contract Properties

The number of residential single family and condo properties that are under contract are standing at 8082 as of July 3.  This remains the highest level in 5years, as did June.  This backlog of properties that are read to close will create a more confident residential real estate market which allows buyers to buy with some assurance that their home prices will not go down in the upcoming years.  Once the buying public takes this position, the housing market starts to heat up.  With the decreasing inventory and increasing number of under contract properties, the closings in July and August will be reflective of this backlog of under contract properties that has occurred over the last 90 days. 

Homes Sold and Closed

2004, May - 5159, July - 5269
2005, May - 4942, July - 5646
2006, May - 5156, July - 5379
2007, May - 5022, July - 4848
2008, May - 4433, July - 4287

This area of the market is still lagging behind.  In June  of 2008 there were 4287 residential and condo units sold and closed.  This is down from May by 146 units and down from June of 2007 by 561units or a 11.57% decrease from one year ago.  Sold data typically is the trailing end of the numbers to turn to a positive.   

In analyzing the data, you can see that in the last two years the number of closings from May to June have decreased, but in previous years that number has typically increased.  What this tells us in the way of the marketplace rebounding is that homes sold and closed will still lag behind for the next 60 to 90 days, but 2008 will be the bottom and in the fall the number of homes sold and closed will start to increase year over year.  You can see that hasn't happened since 2005 in the Denver area. 

The main reason for the backlog in closings is because of the longer period of time required to get loan approvals, appraisals and inspections.  A small percentage of these backlogged closings will not close at all due to loans not being approved.  I am seeing a lot of this in the market, also.  This is all the more reason why more and more sellers are requiring pre-approvals to be submitted with contracts.

Another interesting statistic occurred in the market in June which does indicate the market is improving.  The number of homes closed above $500,000 to $2,000,000 increased by 72 more units closed.  This was a 23% increase over May.  These price ranges do not see that kind of increase unless the price ranges below it are selling.  This does tell us that from zero to $500,000 we have sellers being able to sell and they are now moving up.  We will watch this statistic over the next several months to see if it is a one month abnormality or a trend. 

Days on Market

Single Family Homes Ave. DOM May '08: 99
Percent Change from Prior Month: -3.88
Percent Change from 1 Year Ago: 1.02

Condominiums Ave. DOM May '08: 104
Percent Change from Prior Month:  -12.61
Percent Change from 1 Year Ago:  -11.86


You can see in this information from Metrolist published on the last day of May that days on the market have decreased from the prior month and the prior year for condos.  This is just one more factor to consider when you are analyzing the trends of the market.  It clearly shows an improving market. 

My Advice

Buy now!  In the lower price range from 0 to $300,000 prices have leveled off.  The $300,000 to $800,000 price range will be next to experience this.  In the over $800,000 level, there are some unbelievable bargains out there!  They won't last forever! 

Be sure to get your pre-approval before you find the home you want to buy.  I can help you with this. 

Sellers, I can compile a Comparative Market Analysis for your home.  Whether you are thinking of selling now or in the future, this can be a very useful tool in knowing how to price your home.