Summer 2018 is in full swing, and I hope this update finds everyone enjoying the summer! I certainly hope these updates are useful as my intention is to be a valuable resource to you so you know you have a true real estate professional in your corner whenever you or anyone you know has any real estate needs.
Denver Metro Area Home Report: June
In our last update in April, the active listings in the Denver market were sitting at 4,619 homes for sale. As of June of this year, active listings have ticked up to 7,436 homes for sale representing a 61% increase from where we were at just 3 months ago. Interestingly, this time last year we were sitting at 7,059 home for sale, so we may be starting to see a gradual increase with active inventory year over year due to some of the factors I’ll outline below with affordability and rising interest rates. However, since 2014 this trend line has remained very typical as we peak in July and starting dwindling down to the low point in inventory which typically occurs in December/January.
Here are also some other interesting tidbits of information worth looking at as cited in the recent DMAR newsletter:
- From 1985-2017, the average number of active listings for June sits at 16,854 homes for sale. As you can tell we are still sitting way below historical norms at 7,436, which will be interesting to see how this all plays out over the new few years. The peak was set back in 2006 at 31,900 homes for sale and the bottom took place in 2015 at 6,197 homes for sale. Would be hard to imagine over 31,000 homes being available for sale in the current environment.
- Affordability for housing in the Denver market remains a big concern as the average Colorado resident needs to make $23.93 per hour just to afford a two bedroom apartment and represents the 11th highest “housing wage” in the US. To compare against, the average Colorado renter makes $17.59 per hour and the State’s minimum wage is $10.20 per hour.
- We are starting to see more price reductions in the Denver market, as sellers are lowering prices to attract more buyers. Proper pricing of a property getting ready to hit the market in conjunction with having it “move-in” ready and staged are critical components to a quicker sale. While we are still in a seller’s market in the $400k and lower price range, buyers are still wanting something they will have to do very little work to if they are spending the money on a higher home price. Of course location has a lot to do with it and as I’ve said; price, location, and condition are critical components to a successful home sale.
- Interest rates may also be starting to cool home prices off some, as there are to be two more rate increases this year which is one more than originally anticipated. We are still well below historical norms with where rates should be, but this goes to show how complacent the public has becomes within a low interest rate environment we’ve experienced for over a decade now.
As we head into the Fall, we should see activity pick back up once again as the kids get back into school and families finish up their summer vacations. Stay tuned!