February Quick Stats
Denver Metro Single Family Housing Stats:
Active Listings: 8,082
- Down 40% from Feb. ‘11
Under Contracts: 3,329
- Up 13% from Feb. ‘11
- Up 12% from Feb. ‘11
Average Price: $270,821
- Up 2% from Feb. ‘11
Average Days on Market: 106
- Down 14% from Feb. ‘11
Denver Metro Condo Housing Stats:
Active Listings: 2,004
- Down 49% from Feb. ‘11
Under Contracts: 821
- Up 11% from Feb. ‘11
- Up 13% from Feb. ‘11
Average Price: $161,143
- Up 4% from Feb. ‘11
Average Days on Market: 101
- Down 22% from Feb. ‘11
Real Estate News
Here’s a riddle: how can it be both a buyer’s market and a seller’s market at the same time? It sounds like a paradox but in fact it perfectly describes our current Denver Metro real estate market. Here’s how:
In the market below $300k where 80% of the homes are sold it’s a blistering seller’s market. You heard it right, a seller’s market! There are only three months of inventory sitting on the market right now, where six months is considered a normal, balanced market. There are simply more buyers than sellers right now and this is translating into multiple offers on listings, sales prices often well above asking prices, and marketing times plummeting.
Particularly hot is the market below $225k, which has only two months of inventory. It’s not uncommon for a listing to have 10 showings and a full price offer in the first week. There are a number of factors that have caused this dynamic, one of which is the dramatic reduction in the number of bank-owned and short sale properties on the market. This reduction in distressed inventory has left regular home sellers in a great position and contributed to the sizzling seller’s market.
Ok, so we know it’s a seller’s market. Then, how can it also be a fantastic buyer’s market at the same time? It is, because according to the National Association of Realtors the Home Affordability Index is at its highest recording ever. Just like it sounds, the HAI is a measure of how affordable homes are in a given area. It’s calculated by comparing the median price of a home in the Metro Denver market to the median worker’s income level, taking into account the current interest rate for a 30-year fixed rate loan. What this means is that the median income earner can buy more house today than ever before. Why? Because home prices, while rising quickly, are still well below their peak prices of 5-6 years ago and interest rates are at never-before-seen historic lows. Take it all together and the average home on the market HAS NEVER BEEN MORE AFFORDABLE.
So, while it seems like a paradox that it can be both a great time to sell and a great time to buy, it’s actually quite true. Call me and I’d be happy to explain more how we got to this state in the market and how you can take advantage of it.
It seems strange but it was only a year or so ago when we had a strong buyer’s market and we felt like we ruled the roost. I would take my buyers out and we would look at a lot properties without any sense of urgency because there was so much inventory in the past 4-5 years. It was such a complete buyer’s market we could negotiate very hard with sellers on price and terms because there was always another property available, always another home coming on the market.
Not anymore. My buyers under $300k are finding a serious lack of inventory and prices rising every month. We have been in a number of multiple offer situations recently, where this was unheard of just a few years ago. With the sophisticated tools I have at my disposal I’m looking harder than ever for just the right property that meets my buyers’ needs, whereas in the recent past there were so many to choose from it was like shooting fish in a barrel.
One of the results of this new market dynamic has been a re-education of my buyers. While we always negotiate strongly, the days of the 80 cents-on-the-dollar offers are fast waning. In today’s market, buyers have to be smart, savvy, quick to act, decisive, and competitive. The great news though is that because the Home Affordability Index is at its highest recording ever, homes are more affordable for the average buyer than they have ever been. By all appearances we are well past the bottom in the housing market and my folks who are purchasing now and locking in sub 4% 30-year fixed rates are buying at the perfect moment in history. Call me and I’ll show you why.
Blistering. Sizzling. Red hot. These are the words that describe our housing market under $300k. We haven’t seen a market like this in years. Multiple offers are the order of the day. There’s simply too little inventory to meet buyer demand so sellers are pushing prices back up to pre-crash levels. The laws of supply and demand are very much in effect. Look at the inventory levels in Metro Denver for the past 10 Februaries:
2012 – 10,086
2011 – 17,358
2010 – 18,869
2009 – 20,059
2008 – 25,037
2007 – 24,838
2006 – 25,484
2005 – 21,730
2004 – 23,212
2003 – 22,989
This is what a recovery is supposed to look like: a dramatic drop in inventory followed by rising prices. If you’ve been considering a move, call me so I can do an analysis of the inventory and price movement in your neighborhood. After many years stuck in a buyer’s market, now might be the time to put your house up for sale and take advantage of the great seller’s market.
The sudden, dramatic rise in prices has been a boon for our fix and flip investors. High quality, fixed-up properties are selling at a premium right now because there are so few of them. An investor colleague sent this email a couple of days ago:
“I’ve been answering the phone “Multiple offers on Ash – if you’re interested in submitting a contract you need to have highest and best tonight and be over list price NET!” I didn’t get a single low-ball and since I answered my phone that way – they knew I wasn’t bluffing! I had three written offers and two other verbals that were going to write but couldn’t compete.”
Consequently, investors are scrambling to get their properties on the market to take full advantage of this hot seller’s market. This in turn means they’re buying properties as quickly as they can, further reducing the available inventory and ironically pushing up prices even further. Tracking this dynamic serves as a great lesson on the real estate market. Everything is always interconnected: home prices, inventory, vacancy rates, interest rates, unemployment, and more.
YCRE in the News
The dramatic turn around in the real estate market has resulted in a flood of press requests for the data and opinions from folks at Your Castle. In the past month we have contributed to articles in the Denver Business Journal, Inman News, Colorado Public Radio, and Money Magazine. The April issue of Money will have an in-depth article on the state of the Denver real estate market and we were happy to contribute to it and all the other stories written about our market.
The mortgage market continues to remain strong with historically low interest rates. Low rates combined with low home inventory are making this a great time to sell your home and move up to a larger home with the same or lower monthly payment. We have several recent examples of clients selling their current homes and getting in to a home $40,000 – $50,000 more with the exact same monthly payment. Please give me a call or send me and e-mail and I’ll do a free analysis to see if this might be a good scenario for you to take advantage of.
Neighborhood Spotlight – Park Hill South
For years, Park Hill South has been one of the most desirable neighborhoods in all of Denver. Bordered by 23rd Ave., Quebec St., Colfax Ave., and Colorado Blvd., this beautiful neighborhood is anchored by glorious Georgian Revival and Italian Renaissance mansions. Years ago it became popular as a bedroom community to Denver. Now it is an ideal neighborhood just a few minutes to all the restaurants, culture, sports, and fun of downtown Denver. The Park Hill Library, Denver Zoo, Museum of Nature and Science, and City Park all are within easy reach. Multiple generations of families have grown up and stayed in Park Hill South and are a testament to the stability and desirability of this neighborhood. Take a drive through it, you’ll love it!
Find Park Hill homes for sale now.