Home prices rise, sales drop

Highlights:

  • Metrolist lists February report.
  • Average price of a sold home rises.
  • Listings up from a year earlier, but it is still a tight market.
Snapshot of February. Source: Metrolist

Snapshot of February.
Source: Metrolist

Home sales prices in the Denver area rose in February from a year earlier, but the number of closings and contracts dropped on a year over-year basis, according to a report released on Thursday.

The report by Metrolist shows that the average price of all homes sold last month rose 6.4 percent to $294,565 last month compared with $276,596 in February 2013.

The average price of a single-family detached home rose 7.3 percent to $324,581 from $302,475 in February of last year. However, single-family home prices dropped 2 percent from $331,374 in January.

Meanwhile, there were 4,001 homes placed under contract in February, a 21 percent drop from the 5,033 in February 2013. Contracts rose almost 10.5 percent from the 3,621 in January.

Peter Niederman, CEO of Kentwood Real Estate, was surprised by the size of the drip for under contracts.

“I’m not surprised it was a bit softer, but it didn’t feel like it was going to be a 21 percent drop,” Niederman said.

However, it is too early to call it a trend.

“One month does not a market make,” he said. “March is the historic start of the spring selling season, so let’s see what happens in March and April, before we see if it is a trend.”

Last year, he said, sales velocity outstripped the supply of homes on the market.

“I was having lunch today with one of our brokers from the DTC and she said listings are just flying off the shelf,” he said. “They are here and then they are gone.”

However, even if sluggish sales activity continues, there is a silver lining.

“If we saw some softening in sales activity, maybe prices would not rise as fast as they have been,” Niederman said. “We saw close to double-digit appreciation last year. While that was good in the short-term, we don’t want home prices to become so expensive that people can’t transact real estate.”

There were 2,645 home closings in February, an 11 percent drop from 2,967 in February 2013 and a 21 percent drop from the 3,342 in January.

There were 7,441 unsold homes on the market last month, a 10 percent increase from the 6,786 in February 2013 and a 2 percent drop from the 7,610 in January.

Homes, however, have been selling faster.

The average days on the market in February was 57, a 29 percent from the 80 days in February 2013 and a 7 percent drop from the 61 days in January.

“The 2014 selling season looks to be another competitive one for home buyers in the Denver metro area,” said Kirby Slunaker, CEO and president of Metrolist Inc.

“We continue to maintain a supply of just 11 weeks, and while prices are stable now, we expect them to increase as buyers become more active in the spring and summer,” Slunaker added.

Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.

 

 

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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Comments

  1. The slowdown is a combination of higher prices and a 100bps rise in rates. If listing inventory falls 10% and contract drop 20%, the net effect is not a tighter market than last year, but looser. It’s the ratio between available listings and contracts that’s important. The rate of appreciation is also slowing, reflecting a slowdown. Down to 6.5% from double digits last year. I agree with Peter, let’s see if this trend continues.

        • The rate of appreciation has slowed a couple of percentage points, but that is exactly what I predicted. I predicted that we would hit double digit appreciation for houses for a couple of years coming off the rebound, then we would see 5-7% appreciation for several years until the prices have doubled from their previous peak prices. I should add that my predictions for apartment building prices is on track to exceed my predictions, having already increased over 50% over the past 3 years. I believe that we will continue to see above average appreciation as long as we have positive job growth in Denver, despite new construction, interest rates, or any other factors.

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