Inventory of active listings nose-dived.
Inventory levels fell 27% in October, CAR reports.
Inventory levels at a record low for an October.
The inventory of active home listings in the Denver area plummeted by 26.9 percent last month from October 2015, according to a report from the Colorado Association of Realtors.
There were only 8,208 total homes on the market last month, believed to be a record low for an October.
By contrast, prospective buyers had 11,227 unsold homes to choose from in October 2015.
There were 6,590 single-family homes on the market last month, a 27.2 percent drop from 9,054 a year earlier.
There were 1,168 unsold townhomes condos on the market, down 25.5 percent from 2,173 in October 2015.
“The scariest thing is that our inventory is not getting any better,” said Karen Levine, a CAR director.
To make matters worse, Levine said that many of the homes on the market aren’t exactly the cream of the crop.
“Much of what is out there is kind of over-priced, not in top condition, or in bad locations,” Levine said.
She said she has spoken privately with a number of top brokers who agree with that assessment.
A number of people listing their homes seem to be pinning their hopes on the fact that there are such slim pickings that they can still demand top prices.
There might be some merit to that if you find someone who wants to buy a home before the year-end and lock into today’s low interest rates.
“If you want to buy by the end of the year, you can’t be too picky,” Levine said.
However, many consumers who feel no urgency to buy, seem willing to remain on the sidelines, she said.
“I’ve been hearing that people are not jumping at every opportunity and are being more cautious than they were in the spring,” Levine said.
At the same time, demand is strong enough to keep inventory levels at ultra-level low levels, she said.
Indeed, there was a mere 1.7-month of inventory of unsold homes on the market in October, a 26.1 percent drop from 2.3 months of inventory in October 2015.
Also, the CAR data shows that 5,582 homes were placed under contract last month, a substantial 9 percent jump from 5,120 in October 2015.
“That was a bit of a surprise,” Levine said. “We were told that people weren’t buying because of pre-election jitters, and showings seemed to be down.”
At the same time, the number of sold homes fell 4.8 percent to 4,968 from 5,216. Levine said that tells her that fewer under contracts in September translated into sales in October.
Meanwhile, the median sales price of all homes shot-up 11.7 percent to $354,000 from $309,000, year-over-year.
The average price of a home was $392,984, up 9 percent from $360,574 a year earlier.
Being able to sell a home for a handsome profit is not a compelling enough reason to put your home on the market, however.
“High prices don’t help you very much, unless you are moving out of the market,” Levine said.
“You get top dollar for your home, which is fantastic, but then you have to pay top dollar for the home you are buying,” she said.
That is flipped around when the market is soft.
“In a bad market, you will sell your home for less, but you also will pay less for the home you buy,” she said.
She said there are some people selling homes in hot Denver markets such as Berkeley, West Highland and LoDo and are moving to suburban markets like Lakewood, where they can get more house for their money.
“Some of these millennials bought homes in these markets a few years ago and now are moving to the suburbs because they have gotten married and want to start a family,” Levine said.
Levine said she was recently asked by a would-be first time buyer where the most affordable homes can be found in the metro area.
“I told him that hasn’t changed in 25 years,” Levine said.
“It is still Aurora and places in the northeast like Thornton and Brighton.”
But he wasn’t interested in those areas.
“I tell people if you want to live in the core Denver neighborhoods, you are going to pay a premium,” Levine said.
She said even more than Donald Trump being elected as president, the most interesting thing about last week’s election, as far as the Denver housing market, was that several states, including California, agreed to legalize marijuana for recreational use.
“A lot of people have said there has been an influx of people in Denver because we had legalized marijuana,” Levine noted.
“Now that consumers have more choices, it will be interesting to see if that underlying belief as far as marijuana’s effect on our economy was correct.”
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. DenverRealEstateWatch.com is sponsored by 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.