Source: Andrew Dodson of the Denver Business Journal
Beginning this January, real estate agents will no longer be allowed to market listings as “coming soon.” The driving force behind this? Agents will try to market to their network and score both sides of the transaction. This new rule creates an even playing field for all buyers and agents, but some brokers aren’t happy with the change.
Falling interest rates. Lower inventory. Higher sales volume. How much higher can prices go?
We’ve been reading again and again in the news about falling interest rates. Then, it finally happened: rates rose for the first time since October 2018. Does this mean interest rates are finally becoming stagnant? While the 30-year mortgage rate is down nearly 1% from last October, a small increase from September is notable. The increase can be partially attributed to a rising stock market and hints of a deal in the China trade war.
Denver home inventory was down 4.5% from last October while homes sales were up 9.4% for the same time periods. This equation has the potential to push prices higher during a season that typically sees steady to modest price increases. If you’re anticipating a deal during the winter season, keep an eye on interest rates. If they keep rising, you may see panicked buyers making rushed decisions in order to lock in a great interest rate.
It’s the time of year again where we talk about seasonal adjustments to the Denver housing market. If you’ve been paying attention to our monthly stats updates you might have an idea of where this is heading. Lets dive in…
MEDIAN SALE PRICE
Denver’s single family median sales price hit a record high in June peaking at $518,750. At first glance, you’re probably thinking that we’re heading into our seasonal adjustment — which you’d be correct to assume. One thing we will be keeping an eye on is how far we dip down during the winter months which could set us up for a really strong summer season.
Sale prices for two-bedroom homes are down a bit this year, while one and three-bedroom homes are posting a modest increase. The real story is four-bedroom homes, up $80k from 2018! The most likely reason: growing families and limited 4+ bedroom inventory are pushing prices sky-high.
The downward trend in interest rates continues. In fact, it has dropped every month this year; almost an entire point since last November. We’ve been spoiled over the last decade with steady, sub 4.5% interest rates. While we witnessed a small taste of rising rates early last year, people aren’t taking low interest rates for granted anymore. Buyers want to capitalize before the trend reverses again.
DAYS ON MARKET
It’s still a seller’s market in Denver, but buyers are able to take a little more time to decide on a home. We would to expect to see increased inventory until the first of the year as buyer’s take a break from their search during the holiday months.
Inventory is slooowly continuing to increase as the year progresses. The real test is whether the trend will continue next spring. Will sellers sitting on the sideline for the last several years finally be confident they can find a replacement home after they sell?
The good news is that active listings are up compared to the previous four years. The bad news is that we need even more in order for it to have a significant impact on home affordability along the Front Range. We still have a ways to go before we get to a balanced housing market.
Rising national unemployment, declining large purchase sales and tumultuous securities markets have some economists forecasting a recession. Despite this, Cushman & Wakefield managing director Jon Hendrickson feels that safe lending practices and Denver’s growth in jobs show a recession is not near.
Hendrickson distinguishes recent recessions from today’s market condition, and why Denver is one of the top markets in the company in the full article.
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.