MOI, months of inventory, are Missing in Action in Denver.
MOI in October 8.6% lower than a year ago.
Denver’s MOI 2nd lowest in U.S., RE/MAX reports.
MOIs are MIA in the Denver area.
Months of inventory, a key metric for measuring the supply and demand in a market, in the Denver area stood at a mere 1.7 months last month, according to a recent report by the Denver Metro Association of Realtors.
That is the lowest it has ever been for an October.
In other words, if no new single-family homes were added to the market and demand stayed constant, in 1.7 months, the equivalent of 7.4 weeks, the entire inventory of homes for sale would be sold.
A national report released by Denver-based RE/MAX on Thursday put the MOI even lower.
RE/MAX’s analysis showed a 1.5 MOI for Denver. Only San Francisco, with a 1.4-MOI, was lower.
Nationally, the MOI last month was 3.9 months, a 13.3 percent drop from 4.5 months in October 2015, according to RE/MAX.
In Denver, the MOI of single-family homes is down 8.6 percent from October 2015, according to DMAR’s data.
An analysis of DMAR’s data by Denver Real Estate Watch shows that the MOI for single-family homes has only been lower four months from the same month in 2015, so far this year.
Last month, the MOI in the Denver area was slightly lower than in January, when the inventory level typically is low for seasonal reasons.
“The MOI is a very important metric to both the seller and the buyer,” said independent broker Gary Bauer.
“If you think you will be able to sell your home, not a problem. If you want to buy a home? Possibly a problem,” he said.
The low inventory, combined with strong demand, is a main driving force for home prices that have risen by double-digits at a time when the inflation rate is less than 2 percent.
However, the shortage of homes depends on the price range.
For single-family homes priced between $200,000 to just under $400,000, there is less than a month’s supply of homes on the market, according to DMAR
However, there is a 9.94-MOI for single-family homes priced at $1 million or more.
The condo market is even tighter.
There was a 1.22-MOI, or 5.3 weeks supply, for all condos last month. For condos priced at less than $400,000, there is less than a one-month supply of inventory.
While there are a number of reasons why the MOI is so low in the Denver area, Bauer said one reason has largely been overlooked.
“A lot of people are owning rental homes longer than they have traditionally,” Bauer said.
“The home rental market is very tight and people who own rental homes are getting such high rents, they don’t want to sell them. They know to replace them with another rental home would be very expensive in this market,” he said.
Homeowners also worry about finding another home to replace the one they sell, he and other brokers note.
Bauer noted that Denver is not alone with a shortage of homes.
“I was recently at the National Association of Realtors’ annual conference Orlando, and clearly, based on the presentations by the speakers and conversations you had with Realtors all across the country, just about every market in the country is suffering from a lack of inventory,” he said.
RE/MAX found that only five cities in the country have a 6-month or greater supply of homes. A 6-month MOI is a market that is balanced between buyers and sellers, according to RE/MAX.
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.