CAR: Record home prices, shortage continues in March

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Highlights:

  • CAR, or Colorado Association of Realtors, releases March report.
  • Home prices soar to a record in March.
  • The average sales price of a single-famliy home in March was almost $394,000.

 

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CAR released a detailed March report on Thursday.

CAR released a detailed March report on Thursday.

By John Rebchook

The average price of a Denver-area, single-family sold in March continued its record climb, approaching $400,000, according to an in-depth report released on Thursday.

The average price of a single-family home sold last month was $393,695, a 14.8 percent increases from $343,049 in March 2014, according to the report by the Colorado Association of Realtors.

The median sales price, also a record, of $340,000, showed an even bigger year-over-year gain.

A severe shortage of homes for sale is the main driving force for rising prices, according to Realtors

Although they are worried about affordability, they do not worry that a bubble is forming.

“I don’t like to use the b-word,” said Anthony Rael, the regional spokesman for the Denver area for CAR.

“I don’t think we are in bubble conditions, although we are all worried about affordability,” Rael said.

Snapshot of historical average prices. Source: CAR's March report.

Snapshot of historical average prices. Source: CAR’s March report.

Indeed, according to CAR’s affordability index, homes were 7.8 percent less affordable in March than in March 2014

Chris Mygatt, president of Coldwell Banker Residential Brokerage in Colorado, also doesn’t see a bubble forming.

“It’s like economist Elliot Eisenberg said at our recent economic forum: there are a lot of factors brining stability to the market,” Mygatt noted.

“That said, this market is putting incredible pressure on buyers, especially first-time buyers. How does a first-time buyer compete in this market?”

Rael said he has been experiencing six to 10 offers for homes priced under $350,000.

“Other brokers are telling me they are seeing as many as 20 to 30 offers,” Rael said, especially for homes priced less than $350,000.

Condos and townhomes were 10.8 percent less affordable than in March 2014.

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It’s not clear that the rising prices are all due to appreciation, caused by a low supply and strong demand.

The mix of homes being sold may explain a part of the appreciation puzzle, Rael said.

“Because so many high-end homes have been selling, that does skew the market,” Rael said.

“We will have to see how this trend plays out in the coming months,” he added.

However, a big factor driving up the prices is that demand far out strips supply.

The number of active listings is only up slightly from the record lows earlier this year.

There were 4,485 single-family in the counties of Adams, Arapahoe, Broomfield, Denver, Douglas and Jefferson, according to the CAR report.

Reports from REcolorado and the Denver Metro Association of Realtors, cover slightly different geographic areas, so they show slightly different numbers.

However, all of the reports show the same trend.

Snapshot of historical median prices. Source: CAR's March report.

Snapshot of historical median prices. Source: CAR’s March report.

Active listings were down 43.1 percent from the 7,881 homes on the market in March 2014, according to CAR.

The townhome/condo market shows an even slightly bigger year-over-year percentage drop.

There were 1,047 condos and townhomes on the market in March, down 47.4 percent from the 1,991 in March 2014.

Overall, there is a 0.9-month supply of condos on the market, while there is a 1.3-month supply of single-family homes on the market, according to CAR.

The 4,503 new listings added to the market in March were down only 0.8 percent from the 4,538 in March 2014.

Meanwhile, the number of under contracts and sold homes were up from the same time period in 2014.

In March, there were 4,254 contracts written, a 93 percent increase from the 3,893 in March 2014.

In the first quarter, there have been 10,169 homes placed under contract, 7.6 percent more than the 9,455 in the first three months of 2014.

The number of sales last month hit 3,245, a 6.7 percent increase from 3,040 in March 2014.

Mygatt said some friends not in the real estate assume he is loving today’s market of record prices and bidding wars.

“To be honest, our agents are tired,” Mygatt said. “They are writing hundreds of offers and it is so competitive out there many of them aren’t the winning bids. It is very discouraging for the agents, the buyers and even the sellers.”

And it is not just tough for sellers who are receiving multiple offers.

Snapshot of average sales prices. Source: Colorado Association of Realtors' March report.)

Snapshot of new listings in March. Source: Colorado Association of Realtors.

“Remember, there are thousands of homes out there are not selling,” Mygatt said.

“These people read about multiple offers and bids above the asking price and they are not seeing it,” he said.

In some cases, they may live in places that aren’t as popular with buyers, he said.

“Even if they live in a neighborhood near downtown, where there is a lot of demand, they might live on a busy street or back up to a power line,” Mygatt said.

In those cases, they must realize that their homes won’t fetch top dollar, he said.

Snapshot of new listings. Source: CAR's March report.

Snapshot of new listings. Source: CAR’s March report.

Overall, Rael said Denver has never experienced a market like this one.

“I’ve only been selling homes for 10 years and I’ve never seen this kind of real estate cycle,” Rael said.

“But I talk to Realtors who have been selling homes for 20 or 30 years and no one has ever seen a market like this one.

“I would say this is market is unprecedented. We are in uncharted water. Honestly, it’s kind of a brutal market.”

Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by 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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