It’s a shifting market to a much more normal buying and selling process then we have seen the last 24 months.
Denver Real Estate Market is Becoming a More Normal Pace.
- Listing Inventory is 10% greater today than 1 month ago. Normally we would see an increase of inventory as the housing market heads through the summer, but a typical number is 6% growth in inventory from July to August
- The number of properties sold YTD is 3.6% less this year than 2015.
- The average price of a home in July of 2016 has increased 9.7% over July of 2015. This pace is slowing down as we saw a slight decrease from June 2016 to July 2016 of 2% less in price.
- Average Days on the Market is the same as one year ago of 27 days on the market creating a significant benefit to sellers entering the market. This stat is very price sensitive as $300,000 homes are moving significant faster than $1.5M dollar homes. Know your price range to better predict the time on the market.
- The number of homes under contract has decreased four months in a row down 2.9% from one year ago.
What Does this Mean for Denver Real Estate?
- The slow increase of the housing inventory is a result of three factors:
- Many homeowners have obtained 4% or lower interest rates on their homes and are comfortable with the payments they are currently making eliminating them from adding their home to the market, hence not as many home entering the market.
- Financing is still hard for self-employed people in Denver and this is still causing homeowners to stay put for fear of not qualifying.
- The appreciation of prices over the last 24 months causes current homeowners to hold off from selling as they may not be able to replace their existing home with what they want.
- The number of sales for 2016 will be less than 2015 as we close out the year. Fewer buyers are entering the market today.
- Fewer Buyers entering the buyer pool will cause pricing to slow down to a 2-4% appreciation rate over the next 12-24 months.
- Buyers can be less committed to close the transaction they have entered for fear of inspection items, paying too much or future job concerns. This causes a little more fall out of contracts and when this occurs in a declining buyer pool market there isn’t another buyer waiting in the wings, causing days on the market to increase.
- Different Price Points and Different Locations react differently in the Denver market. Understanding your neighborhood with accurate supply and demand sales will give homeowners a better picture for your specific home.
What Should Sellers Be Doing to Take Advantage of the Market?
- Condition, Condition, Condition. As prices have risen, the buyer pool is expecting upgrades and better conditioned homes for décor and mechanicals. Before entering the marketplace, improve the basic areas of kitchen, baths and service mechanicals of the home.
- Do not get overly aggressive with your price as the home will still need to appraise. It’s better to get a fair market value price quickly than try to wait on the market and negotiate to a lower target. This will reduce buyers to your home.
- Remove any barriers to sale, by getting pre-approved for you next home before you put your home on the market. The mental security in knowing you can purchase your next home, gives you a better negotiating position when selling.
What Should Buyers Be Doing to Take Advantage of the Market?
- Absolutely, Positively, be Pre-Approved for Purchasing. Do not change your financial position during the buying process as loan approval is really checked and re-checked right up to closing on your new home. In other words, do not quit your job or go out and buyer a big ticket item before closing.
- With the prediction of less appreciation in price over the next 2 years, try to gather enough money for 20% down payment if possible. This will reduce your payments as to eliminate the use of mortgage insurance and will insulate your purchase price in the event you choose to sell in the next 3 years.
- Consider pre-paying your principle or going to a 15-year mortgage. Creating a scenario of more equity will give you more flexibility down the road.
Good Selling and Buying!
So, How’s the Market, August 2016. All data taken from REColorado, on August 8, 2016. Denver, Colorado.