Denver Real Estate Market – October 2018
Happy Fall everyone! I hope this update finds everyone doing well and enjoying the changing leaves as the holidays are fast approaching for a close to 2018. Let’s jump in and see what’s been happening since our last update:
Denver Metro Area Home Report: September
In our last update in July, the active listings in the Denver market were sitting at 7,436 homes for sale. As of the end of September, active listings were sitting at 8,807 homes which represents a 16% increase over where we were at this time in 2017. As a matter of fact, we haven’t seen inventory levels in the range since the Fall of 2013 which was 5 years ago. Home sales year over year from 2017 to 2018 are also down a little over 20%, so the market has started to show signs of flattening out which will level the playing field much better for buyers in the marketplace. Rising interest rates have certainly helped cool things off a bit too with 30 year mortgage rates sitting around 4.75%-5%, but still low from a historical perspective. In my market update from April of 2017 talking about the hot real estate market I said, “I’m thinking we have another 12-24 months left, as rising rates should help cool things off a bit”. Here we are 18 months later and the signs are definitely starting to point to a softening market, which was needed on many levels.
Here are also some other interesting tidbits of information worth looking at from the recent DMAR newsletter:
- Of the 8,807 active listings currently on the market, 2,796 of them are homes valued at $400k or less which only makes up 30% of the active listings. This still remains an area that is lacking in inventory, but as the market starts to shift across the board buyers will be more particular when buying properties as the days of just putting any property on the market regardless of the condition are coming to an end. Move-in ready properties that show well and priced correctly will continue to be the ones that experience success.
- The 20-year average change in active listings from August to September is a negative .82%, or a slight decrease. This year we saw an increase of 7.04% of listings from August to September, which is the largest increase ever recorded from a percentage standpoint.
- The Federal Reserve recently increased interest rates another .25% raising the current Fed Funds rate to 2.25%. They are expected to raise rates another .25% in December as well. Recent stock market volatility has coincided in part to the Fed starting to tighten their fiscal policy, which was long overdue.
- Price reductions are becoming much more plentiful now as we are closing in on the end of the Fall season that also coincides with many sellers who priced these homes above where they should have been in the first place and likely got poor advice from their real estate agent in order to get the listing. Working with a professional like me with the finger on the pulse of the marketplace will be critical for success going forward. I’ll comment some more on this in the “Too late to sell your home?” section.
- Almost a quarter of the Denver Metro renters use over half of their income towards just keeping a roof over their heads, which may also be indicating rent levels should start to flatten out and even drop in many cases as supply is becoming more and more plentiful. I will also be interested to see what new home builders will start to do as specs homes are becoming more and more available in the higher end price point that will also add to the existing competition.
What should we be taking away from this? I believe the market has finally started to flatten out and I think we will be seeing much bigger price reductions in the higher end price ranges. Affordability still remains a big concern overall as we can determine from the inventory levels in the $400k and lower price range. Stay tuned as I’ll being writing my next update in January and it will be interesting to see where we will be sitting at that point.
That should do it for this update and look for another market update in January as I will plan to write one of these every quarter. As always, if you or anyone you know should have any real estate needs, please consider using me as a resource as your business and referrals are GREATLY appreciated!