- Two Denver-area housing market reports released on Thursday.
- One report was by REcolorado and the other by the Denver Metro Association of Realtors.
- Both reports show record low inventory and record high home prices.
Denver-area home prices soared to record levels, while the inventory of unsold homes continued their slide to all-time lows in February, according to two reports released on Thursday.
REcolorado, Colorado’s largest MLS, showed 5,087 unsold homes on the market last month, a 25.3 percent drop from the 6,808 in February 2014 and a 1 percent drop from the previous low of 5,152 in January.
DMAR’s report tracks housing activity in an 11-county area, while REcolorado tracks sales by member
DMAR’s report showed only an inventory of 4,079 homes and condos on the market in February, a 33.16 percent slide from 6,103 in February 2014 and a 2.21 percent drop from 4,171 in January. Anthony Rael, chairman of the DMAR Market Trends Committee, described the unsold inventory as an “unprecedented low.” DMAR’s report also showed 1.77 months of inventory for single-family homes in February and slightly less than a month of inventory of unsold condos on the market.
REcolorado bases its report on data from its 16,000 members throughout the Denver area.
Rael said it is not troubling that DMAR and REcolorado show different inventory levels.
“That is only because they are both snapshots of different geographic areas,” Rael said. “Both REcolorado and DMAR are trending exactly the same as the record low levels of inventory.”
Indeed, he wish he had better news to report.
“I’m tired of this low-inventory level mantra,” Rael quipped.
Both reports showed almost identical increases in the price of homes sold and closed in February.
REcolorado shows the average price of all sold last month at a record $344,796, a 17.4 percent increase from $293,725 in February 2014 and a 4.76 percent increase from $329,141 in January.
REcolorado put the median sales price at $292,000 in February, a 15.87 percent increase from $252,000 in February 2014.
According to DMAR, the average price of all homes sold last month was $348,127, a 17.38 percent jump from $296,591, year-over-year and a 5.44 percent increase from $330,161 in January.
The median price of all homes, according to DMAR, was $295,000 in February, a 15.69 percent increase from $255,000 in February 2014 and a 3.96 percent increase from $283,750 in January.
Peter Niederman, CEO of Kentwood Real Estate, said those type of increase seem almost unprecedented.
“Over the years, I can’t remember a 5 percent jump in one month,” Niederman said.
“I find both the year-over-year and the month-over-month percentage increases to be unrealistically high,” Niederman said.
In part, he said, it is possible that a lot of luxury homes sold in February, compared with January and February 2014. In that case, the prices last month might be skewed a bit on the high side. In other words, it is not all appreciation, but the mix of homes, that led to to the big percentage gains.
And, without a doubt, the record low inventory is driving up prices, he said.
“I am glad that market is performing well, demand is strong and people want to transact real estate,” Niederman said.
Not only is the record low inventory of unsold homes making it tough for those who want to buy, home prices may become out of reach for many, he said.
“If these numbers are accurate, I am concerned that prices are going up too fast in too short of a time,” Niederman said. “My biggest concern is that Denver will be perceived as an unaffordable market.”
Rael also is concerned about affordability, especially for first-time home buyers.
“As year over year housing prices continue to increase, home affordability is going to become a greater issue as the entry point for first-time homebuyers grows higher and higher,” Rael said.
Meanwhile, REcolorado also reported that 4,537 new homes came on the market in February, a 14.45 percent increase from the 3,964 new listing in January, but a 4.4 percent decline from the 4,346 in February 2014.
The number of housing contracts out-paced the new listings by more than a one to one basis.
There were 5,177 homes placed under contract last month, a 6.8 percent increase from the 4,845 contracts written in February 2014. Contracts rose 14.7 percent from the 4,514 in January.
than last year.
“We’re seeing an impressive number of new home listings come on the market this year as sellers begin responding to consumer demand,” said Kirby Slunaker, president and CEO of REcolorado.
“Even with the increase in new listings, our historically-low inventory levels remain the biggest challenge facing the Denver-area housing market, as they are undoubtedly contributing to rising average home prices and reducing the amount of time homes are on the market,” Slunaker said.
The averages days on the market was 39 in February, down 25 percent from 52 days in February 2014, but unchanged from January.
DMAR reported that 2,667 homes and condos closed last month, a 13.6 percent drop from the 3,017 sales in February 2014.
But if you drill down into the data, all of the drop in sales is occurring for home priced below $300,000, where ironically, the demand is the strongest, according to Rael.
“There is just no inventory below $300,000,” Rael said. “If you look at sales from $300,000 really all the way up to $2 million, sales are up a lot on a year-over-year basis,” Rael said.
Rael said several factors continue to drive demand in for housing in the Denver area. Young professionals are especially eager to buy homes, according to Rael.
“Scarcity of inventory and increasing home prices, coupled with the possibility mortgage interest rates will rise when the Federal Reserve meets in June, has millennials entering the real estate market at a rapid pace,” Rael said.
“The continuation of a strong job market in Colorado will hopefully offset the drag from an expected increase in mortgage rates this summer,” he said.
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