DMAR Real Estate Market Trends Report | FEB. '15
Denver-Area Deflation Due to Housing Shortages, High Demand
In January the market in Denver experienced a little deflation due to eager buyers and a lack of available properties for sale. With mortgage rates hovering in the 3.5% range, both first-time buyers and boomerang buyers are eager to hit the market. Their desire to buy is reflected in their confidence ranking, up to 102.9 from 93.1 in December. This is the highest consumer confidence has been since August 2007.
Active listings in the residential market (single family and condos) decreased slightly 4.23% in January. The number of sold listings decreased 42.74% compared to the previous month. Said Anthony Rael, Chair of the Denver Metro Association of REALTORS® Market Trends Committee:
“There’s no need to panic because January is traditionally a slower market.”
Sellers already know there is no reason to panic, because price appreciation is looking good. Year over year average sales are up 11.22% and median sales prices are up 16.55% for single family homes. The condo market remained strong, with relatively unchanged average and median sale prices since December. Year over year, condo sales prices showed double-digit gains. The only downside of this price appreciation? The lack of available homes.
“…[sellers]…are also feeling a bit of shock and awe as they seek a replacement property.”
Rael explained, citing the scarcity of homes available for sale as one of the reasons sellers might struggle to find their next property. Low inventory could be a new norm for the next year to 18 months. Rael advised DMAR members on how to cope with this change:
“…the greatest opportunity in 2015 for DMAR members will be proactively and aggressively ramping up their marketing campaigns to increase the number of homes available for sale and continuing to educate consumers on the value of homeownership.”
Understandably with this rise in scarcity, there has been a large increase in foot traffic at open houses and an increase in showing activity. That means multiple offers and raising prices for the foreseeable future. But the Market Trends Committee encourages sellers to set realistic expectations when pricing, so that their showings and open houses will yield offers instead of just interest.
Buyers, on the other hand, should be prepared to remain diligent and patient. It is important not to hesitate in a market like this. Similarly, buyers need to consider what they ask for in inspection objection. With so many interested parties, sellers might let deals fall through and re-list a property rather than deal with the hassle.
By the numbers, the inventory of available homes for sale was 4,171 at January’s month end. 3,676 properties came onto the market, 3,502 properties were placed under contract, and 2,328 properties closed at a median sold price of $285,000 and an average sold price of $332,767.
The report also includes statistics and analyses in its supplemental “Luxury Market Report” (properties sold for $1 million or greater), “Signature Market Report” (properties sold between $750,000 and $999,999) and “Premier Market Report” (properties sold between $500,000 and $749,999). Notably, sales of homes in the Signature Market are up 16.95 percent since 2013, and sales of homes in the Luxury Market are up 14.81% since 2013.
Despite the scarcity now, 2015 is shaping up to be a prime time for new home construction. Even though it could take ten months to build a home, buyers with property are relieved to have reserved their future home-site.
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The DMAR Market Trends Committee releases reports monthly, highlighting important trends and market activity emerging across the Denver Metro area. Reports include data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties. Data for the report was sourced from REcolorado® (December 2, 2014) and interpreted by DMAR.