Denver-area buyers placed 4,457 homes under contract in September, almost a 16 percent jump from September 2011, when 3,949 homes were placed under contract, according to a report released this evening by independent broker Gary Bauer.
Last month was the strongest September since 2009, when 5,228 homes were placed under contract, according to Bauer, who based his report on Metrolist data. Metrolist also released an analysis of its data. Three years ago, home sales were being boosted by the federal first-time home credit program that provided qualified buyers with up to an $8,000 tax credit.
“Year-to-date results are really strong in the region,” said Kirby Slunaker, Metrolist president and CEO. “Despite the seasonal downturn, the annual figures are incredibly robust.”
For seasonal reasons, sales activity almost always declines in September from August, and September was no exception.
The number of contract dropped 14.2 percent from August and closings were down 15.7 percent on a month-over-month basis.
“The fall season is upon us, the weather is changing and buyer demand is decreasing,” Bauer said.
Meanwhile, 3,949 homes closed last month, 18.3 percent more than the 3,337 in September 2011. Last month was the strongest September for closings since 2008, when 4,265 homes were sold.
At the same time, the number of unsold homes on the market hit a 13-year low. Last month, buyers only had 10,470 homes to choose from in the Multiple Listing Service, the lowest level since 1999, when the inventory of unsold homes stood at 10,310.
Inventory levels in September were down 32.6 percent from the 15,333 unsold homes on the market a year earlier. The number of unsold homes dropped 3.3 percent from the 10,286 in August.
With a falling inventory and increased demand, home prices are on the rise.
The average price of a single-family in September was $306,633, 9.3 percent higher than the average price of $280,289 in September 2011. The median price of a single-family home was $255,000, almost 11 percent higher than the median price of $280,289 in September 2011. The average condo sales price in September was $186,843, 16.8 percent higher than the average price in September 2011 of $159,980. The median price of a condo in September was $147,500, 14.4 percent higher than a year earlier, when it stood at $259,980.
Bauer said some of the price increase is coming from “real appreciation,” but he thinks the majority of the increase is from the mix of homes sold in September. Much of the housing appreciation is occurring in the neighborhoods near downtown Denver, he said. “We have seen some price increases, but overall, they are not too steep, which is good news for buyers,” Bauer said.
“Looking at the big picture and what is driving the market – interest rates that are not only historically low, but at all-time lows, numbers released today that show unemployment at 7.8 percent, improving consumer confidence, people feeling more secure in their jobs and other factors – I would say we saw the inflection point in 2011 and in 2012 we truly seeing a recovering market,” Peter Niederman, CEO of Kentwood Real Estate said on Friday. “The numbers on a year-over-year basis all look good. Everything is holding. There is nothing irrational going on.”
Will the market continue to improve?
“I think so,” Niederman said, with a caveat. “I hate to use that over-used phrase, ‘cautiously optimistic,’ but there are still a lot of stories to be told that could impact the market, such as global cross current. But the U.S. seems to be on the right path of recovery. Whatever side of the political spectrum you are on, it is clear that both President Obama and Mitt Romney want to create jobs and that will only help the housing market. And home builders are building to meet demand, which is very positive for the economy and the recovery.”
Chris Behrens, an owner of New Era Realty in Denver, noted that prices are still well-below their peaks of five or six years ago.
“(The) good news is upward price movement could mean potential for more upside especially since we have nearly a year of increases.” Behrens posted on Facebook. And with mortgage rates hovering at all-time lows of about 3.5 percent, “Buy or sell, its great out there,” Behrens said.
The number of homes that closed last month equated to $1.1 billion in sales volume in September, about $250 million more than in September 2011. And in the first three quarters of the year, the closed dollar volume hit $9.7 billion, $2 billion more than during the first nine months of 2011.
Well-priced homes also are flying off the shelf.
Bauer’s research found that 52 percent of the homes placed under contract did so in 30 days or less than the listing date.
Overall, a home on average was only on the market for 64 days in September, a 39 percent drop from the 105 average days on the market a year earlier, according to Metrolist.
The combination of historically low inventory and dramatically declining days on market makes metro Denver a bellwether for the national market, Slunaker said.
“This is the best environment for sellers that we’ve seen in a long time and may be a leading indicator for other like-sized markets around the U.S,” he said. “With 13-year historic lows for available homes and the continued strength in sales, we’re optimistic that home prices will hold stable throughout the fall and winter months.”