All data taken from REColorado, on August 13, 2015. Denver, Colorado.
Denver Real Estate Market is Becoming a More Normal Pace.
- Listing Inventory is 8% less today than 12 months ago. Normally we would see an increase of inventory as the housing market recovers, but that is not the case for Denver housing. However inventory is up 19% over June 2015.
- The number of properties sold YTD is approximately the same over 2014.
- The average price of a home in July of 2015 has increased 10% over July of 2014. This pace is slowing down as we saw a slight decrease from June 2015 to July 2015
- Average Days on the Market is decreasing this year to 22 days on the market creating a significant benefit to sellers entering the market. This stat is very price sensitive as $300,000 homes are moving significant faster than $1.5M dollar homes. Know your price range to better predict the time on the market.
- The number of homes under contract has decreased two months in a row down 5% from June numbers.
What Does this Mean for Denver Real Estate?
- The slow increase of the housing inventory is a result of three factors:
- Many homeowners have obtained 4% or lower interest rates on their homes and are comfortable with the payments they are currently making eliminating them from adding their home to the market, hence not as many home entering the market.
- Financing is still hard for self employed people in Denver and this is still causing homeowners to stay put for fear of not qualifying.
- The appreciation of prices over the last 24 months causes current homeowners to hold off from selling as they may not be able to replace their existing home with what they want.
- The number of sales for 2015 will be less than 2014 as we close out the year. Fewer buyers are entering the market today.
- Fewer Buyers entering the buyer pool will cause pricing to slow down to a 2-4% appreciation rate over the next 12-24 months.
- Buyers can be less committed to close the transaction they have entered for fear of inspection items, paying too much or future job concerns. This causes a little more fall out of contracts and when this occurs in a declining buyer pool market there is another buyer waiting in the wings, causing days on the market to increase.
- Different Price Points and Different Locations react differently in the Denver market. Understanding your neighborhood with accurate supply and demand sales will give homeowners a better picture for your specific home.
What Should Sellers Be Doing to Take Advantage of the Market?
- Condition, Condition, Condition. As prices have risen, the buyer pool is expecting upgrades and better conditioned homes for décor and mechanicals. Before entering the marketplace, improve the basic areas of kitchen, baths and service mechanicals of the home.
- Do not get overly aggressive with your price as the home will still need to appraise. It’s better to get a fair market value price quickly than try to wait on the market and negotiate to a lower target. This will reduce buyers to your home.
- Remove any barriers to sale, by getting pre-approved for you next home before you put your home on the market. The mental security in knowing you can purchase your next home, gives you a better negotiating position when selling.
What Should Buyers Be Doing to Take Advantage of the Market?
- Absolutely, Positively be Pre-Approved for Purchasing. Do not change your financial position during the buying process as loan approval is really checked and re-checked right up to closing on your new home. In other words, do not quit your job or go out and buyer a big ticket item before closing.
- With the prediction of less appreciation in price over the next 2 years, try to gather enough money for 20% down payment if possible. This will reduce your payments as to eliminate the use of mortgage insurance and will insulate your purchase price in the event you choose to sell in the next 3 years.
- If time permits, do a pre-inspection before buying. This will give you enough data to make an informed offer on your purchase that gives the seller enough information to accept a more favorable price to you, as the buyer.
Good Selling and Buying!