Home Sales Increase in the Denver Area from November to December, 2008

Real Estate Agent with Kenna Real Estate Company

The number of houses sold in 2008 in the Denver area was off 6.47% from 2007.  An interesting piece of data to consider is that December of 2008 had 2772 homes closed and November 2008 had 2602 homes closed.  This is the first time in 6 years that December outperformed November in the number of homes sold.  December 2008 homes sold total was only 22 units short of the 2794 homes closed in December of 2007.  The real trend to watch is when a year over year sold data increases for each month.  The Denver market will become a resurging market when you have a current month outperform the sold data from a previous year.  A trend is a full 3 months in a row of increasing sold numbers, year over year.  We, at Prestige Real Estate, LLC, suspect that the number of sales for 2009 will start to outperform the number of sales for 2008 each month starting early in the year. 

The rest of the story about an improving Denver market is about the listing inventory which is at a low not seen in 6 years.  The current homes that are active on the market as of Jan. 6 is 19,833.  This represents a 19.03% reduction from January of 2008 and a 2438 unit decrease from last month.  This total active inventory represents a 5.57 month supply of homes. 

This is the first time since January of 2006 that Denver has experienced a monthly supply lower than 6 months for the entire market place.  A 6 months supply is the breaking point where the market begins to change from a buyer's to a seller's market and prices begin to increase.  It's all about supply and demand and the demand is increasing because of the very low interest rates.

However, the better way to look at this data is to break up the price ranges to show the difference in what is happening at lower end prices and upper end prices.  Looking at the price range between $0 and $250,000 there are 8593 active homes.  Using an annual rate of current sales, there are 27,593 homes closing in this price range. Taking the 8593 actives divided by the 27,593 sold properties, which equals .31, and multiply that number by 12, you get a 3.74 month supply of homes between $0 and $250K.  That is quite a bit less than the 6 month breaking point mentioned above!  There s no question prices are beginning to rise and will continue. 

Let's go to the price range of $250,000 to $500,000 to see the difference in the market conditions.  The number of homes that are active in this range is 6309.  The total number of annual sales is 11,808 homes.  Doing the same formula we get a 6.41 months supply of homes.  This would indicate that this price point, in the next 6 months, will start to experience price increases as the inventory reduces below a 6 month supply.  If the market inventory increases in this price point for whatever reasons, i.e. foreclosures, desperate sellers, etc. it may take to the 3rd or 4th quarter of 2009 to see appreciation, but it is coming and now offers a great time to buy in this price range. 

The price range from $500,000 to $750,000 further explains why the deals in the Denver market are going to be above $500,000 for buyers.  This makes for a perfect time for a buyer to move up as they can sell their home priced below $500K for closer to market value and be able to pick up an upper price range home at a discount.  Add to that, lower interest rates that are currently being offered and there could not be a better time to move up.  Here's why.

The current home inventory is 2262 in the $500K to $750K price range.  The number of total annual sales in the price point is 2048 or a 13.25 month supply.  This supply of over one year will really give the buyer the opportunity of a decade to buy his dream home in this price range. 

If a buyer obtained a loan of $400,000 today and got a 4.5% interest rate, he would have a payment of principal and interest of $2,026.  When the rates were 6% the monthly payment would have been $2398 per month or a difference of $372 per month.  What this means in terms of qualifying for a loan is that the monthly income could be reduced by $1200 to qualify for a loan under today's lower rates.  An even greater savings spread is created as you go up in price. 

Another reason for a buyer to buy now is that even though a home priced at $800,000 may not appreciate much in 2009 and their current residence of $400,000 may appreciate at 3%, the potential appreciation in the $800K home will be better over a 5 year period.  Take $400,000 times 3%, or $12,000 and do simple interest and you get a $60,000 appreciation over 5 years.  A home at $800K at 3 % interest over a 3 year period equals at $72,000 appreciation.  It is a much better time to move up now than before the $800,000 home starts to appreciate. 

The next price range of $750,000 to $1,000,000 will even expand the buyer's ability to make a deal.  Total inventory in this price point is 1077 and there is an annual closing rate of 656 homes which gives us a 19.7 month supply.  Here's a price range that will be 18 months away before the supply reaches that 6 month breaking point we explained above. 

What Should Buyers and Sellers Do to Make This A Successful Market for Them?


  • Price your home at or below market value to attract the most attention.  Do not worry about the low ball offers that may come in, but think about the number of buyers that will consider your home to be a deal. 
  • Make your home the best kept property.  Spend some time and money doing any and all repairs needed.  A fresh coat of paint and shampooed carpet go a long way in helping to sell your home. 
  • Clear the clutter and clean, clean, clean.  The home that sparkles makes the buyer feel very comfortable about the possibility of living in that home. 
  • Be the most tastefully decorated in your price range and market.  If you are not adept at decorating, hire a stager.  Ask your realtor for a referral.  Then listen to that stager and do what she says.  Remember why we always love the model homes that builders provide.  It is because they are so well staged. 
  • Price your home on the search numbers 0, 25, 50 and 75.  What this means is that the buyers search properties in ranges like $200,000 to $250,000 or $250,000 to $275,000.  Pricing your home at $250,000 allows for both searches to find you. 


  • Move up to a home you really want, but have been hesitant to move to due to the uncertainty of the market.
  • Take advantage of the lowest interest rates in 40 years. 
  • Get pre-approved.  Get a pre-approval letter from your lender to submit with your offer.  This is more and more important today and a must for short sale or foreclosed properties.  Pre-approvals usually last only about 45 days.  Check with your lender to see how long theirs will last.  Make sure you are ready to purchase during that time frame.  Redoing your approval letter means doing another credit check which will lower your credit score slightly each time you do it. 
  • Get the seller to pay for your closing costs to assist in your purchase.  The seller can pay up to 3% of the closing costs on most loans. 
  • If you are in the $0 to $250,000 price range, don't hesitate too long when you find that perfect home or maybe even the one that is almost perfect.  It may be gone before you know it. 

Both buyers and sellers:

Find a realtor who is knowledgeable in the area, who responds quickly and who will put in writing what they will do for you.  Hire the one who will do the most, not the one who is the cheapest.  You get what you pay for.  Having a top notch realtor who is working very hard on your behalf is a must to help you as a buyer find the home you want and to get it for the price and terms you want or as a seller to sell your home quickly and for the best price. 




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Barbara Salisbury

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