Real Estate Market News. The best way to understand our real estate market is to take the time to dig deep and look at the numbers. Whether you’re a home […]
Real Estate Market News. The best way to understand our real estate market is to take the time to dig deep and look at the numbers. Whether you’re a home owner wanting to understand how your biggest investment is doing, a renter thinking about taking the plunge into home ownership, or a real estate investor looking for your next opportunity, understanding the real estate market data is critical. This month I’m going to geek out and walk you through the REcolorado metro Denver quarterly snapshot, explaining each entry to help make sense of our housing market.
The columns on the top are as follows:
Active Listings: 8,859 down 0.8 percent year-over-year. The number of active listings has plummeted since the market began recovery in 2009. In 2007 in the middle of the downturn we had over 31,000 homes on the market – a true buyers’ market. Now it’s the opposite. We had only 8,859 homes on the market at the time of this snapshot, an incredible plunge supporting our sellers’ market. If you’ve ever thought about selling, this is the type of market you’ll want to sell in!
Under Contract Listings: 7,023 down 1.8 percent year-over-year. Slightly fewer properties have gone under contract this year versus last year. The very low inventory of properties on the market is keeping this number down. Until inventory returns to the market we can continue to expect the number of properties going under contract to remain low.
New Listings: 7,483 down 6.5 percent year-over-year. The number of new listings continues to drop, leading to the extremely low housing inventory in our market. Our supply/demand equation is somewhat out of whack with a huge number of buyers looking to purchase a home and very few sellers willing to list theirs. This has led to our super strong real estate market and the resulting rise in prices the past seven years.
Sold Listings: 5,192 down 19.3 percent year-over-year. This number surprises a lot of people. Everyone thinks we’re having this massively crazy up-market and lots and lots of homes must be selling, but nothing could be further from the truth. Because our inventory is so low – close to the lowest inventory per capita ever in metro Denver – there just isn’t a big selection to buy from. The result being that the number of homes sold is down, not up, and by a very significant number.
Total Days on Market: 20 same as last year. A normal market of balanced supply and demand will have about 90 days on market (which is the same as six months of inventory in case you run across that number). A stronger market will have fewer days on market and vice versa. Twenty days on market is incredibly low. It means demand is extremely high for housing and sellers are selling their homes in near record time. If you have been out looking at homes recently you’ll know what I mean. More and more often we run into other folks looking at the property at the same time we are because there are so few properties on the market. Smart buyers have learned to act quickly to get the home they want, driving the DOM even lower.
Median Sold Price: $350,000 up 12.3 percent year-over-year. The median price is the middle price of all homes sold – not the average price. For example, if five homes were sold in an area at the following prices: $100,000, $200,000, $300,000, $800,000, and $900,000, the median priced home is $300,000, but the average priced home is $460,000. Over the past 40 years metro Denver home prices have increased on average 5.9 percent per year. 12.3 percent is significantly above average, a result of a lot of demand for homes, not much supply, a strong employment market, a strong economy, etc.
Average Sold Price: $408,406 up 12.1 percent year-over-year. When the Average Sold Price is below the Median Sold Price it means that the lower end of the market is doing somewhat better than the higher end of the market, and of course the opposite is true as well. The fact that both yearly percentage changes are almost identical means the market is more or less consistent both above and below the average and median prices.
Percent of Sold Price to List Price: 100.6% down 0.2 percent year-over-year. A sign of a very strong market is when the final sales price compared to the list price is almost the same, as it currently is in our market. In a weak market, buyers will try to lowball an offer and often get the property well below asking price. But in a market like ours, sellers are getting on average more than what they’re asking! What we often call the Average Discount isn’t a discount anymore, it’s the opposite. I guess we’ll have to start calling it the Average Premium! Today, homes are selling 0.6 percent above the asking price and that percentage is almost identical to what it was a year ago. This is another sign of a strong housing market.
If you’re reading this newsletter you probably have at least a passing interest in real estate. The more you learn the more likely you’ll make the right decision when it’s time to make a move. I spend a good part of my life studying these figures to help you achieve your goals. Please feel free to contact me if you have any questions or there’s anything I can help you with.