This post will be short and sweet and may be a little redundant. The following is happening right now in the Denver Real Estate Market:
- Inventory is at a low not seen in many years, low supply.
- Showing Volume has picked up substantially in the last month, more demand.
- Buyers are complaining there is nothing quality for them to choose from, a reflection of bullet points 1 & 2.
Unless we have a drop in demand or a flood of supply we are on our way to seeing real estate prices rise in metro Denver! It is Economics 101 the Law of Supply and Demand!
I also believe our market is turning to a seller’s market from the bottom up. Not a bad time to sell and move up if that fits with your current financial situation and goals! Sell in a stronger market than you are buying in!
I have done this once before and felt it appropriate that I do this again as these numbers all reflect in very clear terms what the market is doing. I am also seeing all of the other tell-tale signs that our market is headed toward appreciation; things like buyers agents complaining that there are not any good properties to choose from, the showing companies indicating showing volume is increasing rapidly, and properties selling at the top of their
individual markets (some not in the pristine condition you would expect).
So here is a line by line explanation:
Line starting with Active
- This shows that in December of 2010 buyers had 18,257 homes to choose from when looking for property, 1 year later there are 40% fewer homes to choose from, just 10,993 active homes from sale. I can tell you there are fewer than the number reflects as there are many short sales/pre foreclosures in here that have pending contracts and the status has not been updated! In short we have very low inventory, also known as supply
Line starting with Under Contract
- This shows a 5% increase in properties that have accepted contracts that are waiting to close. In short you can read this as a 5% increase in demand year of year from December 2010 to December 2011.
Line starting with Sold
- This shows a 4% increase in closed transactions year of year. In short you can read this as a 4% increase in demand year of year from December 2010 to December 2011. This correlates nicely with the under contract line.
Line starting with Avg Days on Market
- This shows a 7% decline in the amount of days it has taken to sell a home year over year. In December 2010 it took 115 days to sell a newly listed home on average. In December 2011 we dropped to selling a home in an average of 107 days. It makes perfect sense that with decreased supply and increased demand that homes will move faster. They should start selling for more, right?
Line starting with Avg Sold Price
- As mentioned a sentence ago we should start to see prices increase due to the simple laws of supply and demand. If supply has been decreased and demand increased prices must go up! This line shows the beginning stages of this starting to happen. Prices increased from December 2010 to December 2011 by 1/3 of a percent.
With the December 2011 MLS numbers explained I am willing to go on the record now that by the time we get year over year numbers for the summer months we will see increases close to 5%! While I do not have a crystal ball I do spend 50+ hours a week involved and paying attention to the Denver Real Estate Market! I am certain that things are improving!
I recently received an email from someone inquiring as to whether Denver home prices have moved up in the past couple months. Inquiries of this sort are fairly common as everyone is eagerly waiting for the market to turn and their home values to start increasing.
My response to the inquiry was that the Denver Market is definitely worth watching. I have noticed a shortage of inventory well below anything I have come across in my 7 years as a realtor and property owner. By my calculations there is close to a 3 month supply of inventory – a full blown seller’s market no one is talking about. The more traditional method of calculating this puts the inventory closer to 4 months, still a very strong market
(neutral is about 6 months of inventory). Anything under 6 months would be perceived as a seller’s market and above 6 months a buyer’s market. 3-4 months inventory is very low! I have also noticed prices starting to inch up, especially noticeable on the low end of the market, sub 150K.
If you’re interested in knowing the value of your home, a great way to monitor appreciation is by signing up for Market Snapshot. Market Snapshot is a free tool that tracks listing and sold prices of homes in your specific neighborhood (or the neighborhood of a home you have your eye on). Every month, Market Snapshot will use MLS data to estimate your home’s current value and send you an update.
I feel like I may sound a little like a broken record, however it is exciting to see the real estate market show signs of substantial health and strength. Since the New Year I have heard or witnessed the following signs firsthand that are all encouraging:
Unemployment is down to 8.5% on a national level!
In December 2011 we added 200,000 jobs, the most in a month in close to 3 years!
Inventories in the Denver Market are at the lowest levels I have seen them since I started my career in real estate 7+ years ago. The laws of supply and demand will now kick in and we will see appreciation! I am already seeing 10-15% rise or more in prices under $100,000. Full disclosure – this is my sampling of less than 20 properties.
My showing coordinator, RERC, who handles about 30% of the showings in the metro area reported the following: 1/6/12 was their busiest Friday since May 20, 2011. 1/10/12 was the busiest Tuesday since September 27, 2011! Not bad considering January is supposed to be slower than May and September.
Buyer agents tell me they are busier than they have been in months and most everyone complains of a limited inventory making for a poor selection for their buyers.
In short, I am seeing enough signs that I can be confidently optimistic that 2012 will be our first year of appreciation in that last several years across the entire metro area. As always there are pockets and neighborhoods that do well despite the overall market trend.
If you own or plan to own a home in Denver you really should watch the video below. The inventory in Denver has shrunk considerably over the last 12 months and is continuing to shrink. I am almost certain we will see appreciation in 2012! If you could not sell your home a year or two ago because you could not get the price you wanted to or needed to just hang in there, that will change soon!
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