Home sales slowed this August as the summer nears its end. In July, we saw high sales volume and sales price. August had a large dip in detached home median sales price while attached condos, townhomes, and duplexes rose in median sales price. Interest rates continue to fall, the lowest they’ve been since October 2016! The star player in Denver’s home market continues to be inventory, with the highest number of August active listings in the last six years. This is resulting in homes spending more time on the market, and lower home prices.
July brought scorching heat and a housing market to match! Almost 15% more homes were sold this July than last, and the median home price was over 5% higher.
The average days homes in Denver spent on the market was 27 this July, significantly higher than July of 2018. While Denver’s housing market is still a sellers market overall, with 1.8 months of inventory, the surge of luxury high rises in Denver has swung the luxury condo market favor back to the buyers. The Denver Metro Association of Realtors’ July report shows 5.6 months of inventory for attached homes priced between $750,000 and $1 million.
Interest rates crept downward again this in July and the median home price was slightly lower than last month offering a bit of relief to Denver area buyers.
Although the market remains in the favor of sellers, it’s not all bad news for buyers. Lower interest rates and a higher number of listings mean it’s a good time for buyers to talk to their lender and start their hunt! Good news for sellers comes in the form of the highest median price for a detached single family home, ever!
Days on the Market
In June 2018, homes in Denver lasted an average of just 18 days on the market. Buyers who aren’t quite ready to make a decision have a slight advantage over last year, with an average of 24 days before a home is sold in June 2019. However, the summer is certainly heating up as this is the shortest time on the market we’ve seen homes sitting in 2019 thus far.
And while the market is speeding up this summer, on a year-over-year basis, it’s starting to slow since it’s fastest pace in 2015.
Denver remains a seller’s market for the seventh year in a row, with an average just shy of 2 months housing inventory as we head into July. The news isn’t all bad for buyers, though – the city was up to 2,451 active listings in June. The last time buyers had this many options was back in October of 2013!
Last month we watched housing prices jump above $500k, just as they did for the first time in April 2018. Yet, even though prices are still sky-high, we’re living in a market that is stronger than last year and also friendlier to both buyers and sellers. How so?
Buyers are benefitting from lower interest rates (down .5 percentage points from last May), more housing inventory (36% more homes for sale), and a smidge more time (roughly half a week more) to see properties before they’re snatched up.
Sellers are benefitting from — wait for it — prices staying high.
Excluding a national event that would radically change the housing market, the demand to live in Denver continues to keep housing prices high. The U.S. Census reported Denver among America’s top 10 cities in overall population growth between 2017-18, with an increase of 1.5%.
For the first time since May of last year, the median sales price for detached single family homes is back above $500,000. The median price this April, however, is 1.2% lower than April of 2018. Months of inventory rising 50% higher in April 2019 compared to last April, means that homes are taking longer to sell. With a lower interest rate and higher inventory, Denver buyers are feeling a little less pressure compared to last April. Last May, Denver experienced the highest median sales price of all time, and May of 2018 was also the second highest month in sales last year. Year-over-year prices and sales volume are lower than 2018, but month-to-month sales and prices are rising steadily in 2019. Regardless of the slighter softness in the market this year compared to last April, it is safe to say we’re in for a very active market this month.
2018 was without a doubt an explosive year for Denver’s residential real estate market. As the dust settles (figuratively, not literally), here at Love Your Hood we’re bringing to light the market conditions affecting current and future Denver homeowners.
Interest Rates Falling
Interest continue to fall this quarter, as they have since reaching a 2018 high in October last year. Falling mortgage rates mean more buying power. In Denver, lower borrowing rates along with other factors have driven the price of both attached and detached homes up consistently over the past three months.
Home Prices Starting Another Climb?
Jumping into sales price; the above graph visualizes the end of a brief lull in Denver home prices in the final quarter of last year. The final patches of snow are melting away, the flowers are in bloom and Denver’s real estate market is heating up too! After last year’s record-setting summer prices eased off largely in part to growth of Denver County’s inventory. Now, Denver is experiencing the opposite–Dropping inventory and rising median home prices. Will median housing prices reach the rates they did last summer?
Housing Inventory Retreating Once Again
Denver’s supply of inventory grew slowly but surely from last July to a nearly 2.75 months this February (the most inventory Denver county has on record since October of 2013!!) Median home prices dropped over that time as inventory rose. The above graph shows the last year of inventory with a sharp drop off after February. Compared to last year, though, inventory in Denver County is high…
More Inventory in Denver, Yet Less Homes Sold
If the cranes dominating the Denver skyline and the orange construction cones guiding you to work every day could be quantified on a graph: this would be it. The above graph shows inventory and sales over the past month compared to last March. Across the geographic area represented above, there is one bar that dominates the graph: active listings in Denver County. With a significant bump in available housing going into Spring of 2019, homebuyers will have a multitude of housing options. It’s even possible median home prices will soften this year compared to last.
November home prices fell from the previous month, but still showed an increase of 7% from a year ago. The median November price of $465,588 is just shy of the yearly median home price. The bigger point to notice is the increase in housing inventory. While we’re still solidly in a sellers market, with 2.2 months of housing inventory (a 57% increase over this time last year), we’re steadily moving towards a more neutral market. It would be hard to not attribute some of this to the rising mortgage rates in a market that is continually becoming less affordable.
Interest rates continue to rise, and September’s brief lull in rising median home prices and sales has disappeared. Prices in October have reached a quarterly high. While inventory is up over last year it is down from the past month. Buyers expecting to gain some leverage in what appeared to be a home market about to recede might have to readjust their budgets. Some of us may be letting out a sigh of relief that average prices are below the $500,000+ mark we reached this spring. However, October is a reminder that we still live in one of the most competitive real estate markets in the country.
All “statistical” signs are pointing to a slowing housing market, with one exception. From the snapshot above one things sticks out pretty clearly: median prices are up. Lets dive into things and see what’s driving our real estate market.
If you’ve been following the Federal Reserve or listening to the news it shouldn’t be a big surprise to hear that rates are creeping up. Since July they increased by .13% (and .82% since Sept of 2017). If you are timing rates, now is the time to lock. If you wait, it will most likely cost you!
Now for a little more context… we’ve been really spoiled over the last five years with sub 4.5% rates! Just like when you are at an epic party — it has to end sometime, right?!
Ok, now we have it dialed way back to 1972. We are still in historically low territory compared to the last four decades. Just ask anyone that bought a home in the early 1980’s what they think of today’s rates. #perspective
Interest rates continued climbing throughout the second quarter, while median home prices started a two month decline. The struggle to find a home for the average buyer is still very real, there are some emerging trends worth keeping an eye on. Is the market changing or is it an early seasonal correction?
Does the chart below remind you of the elevation gain during your last run? 2018’s interest rates started out at 3.9% and are currently at 4.57%. Most experts predict continued increases for the remainder of 2018. If you are currently under contract, a conversation with your lender to lock your rate should be priority number one.
The last time interest rates were at the 4.5% mark was in December of 2013. For those financing their purchase, increasing rates decrease buying power. For those on a budget, that means lowering your max price to accommodate the extra interest in your payment. (more…)