Real Estate Market Report
BY GILBERT MOHTES-CHAN, MONDAY, JUNE 27, 2011.
Inman News™
Downtown Denver. Flickr image coutesy of Eric Kilby.
Metro Denver heads into the prime summer season with fewer available homes on the market. The monthly inventory of unsold homes in May declined 11.1 percent year-over-year to 19,573 units. The number was virtually unchanged from April, which recorded the lowest level of inventory in nearly a decade.
The number of unsold homes per month has remained below 20,000 for six-straight months, a sign that homeowners are sitting on the sidelines because they can’t or don’t want to sell their properties.
This report highlights real estate market statistics and trends in the Denver metro area and includes a chart with detailed market data and commentary from local real estate professionals.
The median sales price of a home in the Denver metro area in May held steady at $230,000, unchanged from a year ago, according to the latest numbers from Metrolist Inc. Sales declined 14.5 percent year-over-year.
The statistics reflect a steady housing market experiencing relatively flat housing prices as well as a below-average monthly inventory of homes for sale. Distressed property sales represent more than a third of the Denver housing market.
Metrolist reported home sales totaled 3,732 in May compared to 4,365 during the same period in 2010. Pending sales, or those under contract, totaled 4,777, up 23 percent year-over-year. There were 19,573 active listings, down 11.1 percent from May 2010. The average number of days on the market jumped 44 percent, to 108 days from a year ago.
In a separate report, Re/Max said May home sales fell 19.6 percent to 3,328 transactions, while the median sales price remained unchanged at $210,000. The active inventory tumbled 30 percent to 18,617 year-over-year. The average days on the market rose 29.3 percent to 97 days from a year ago. The region had 4.2 months of inventory at the May sales pace.
Denver home values hit a 25-month low in March and were down 14 percent from their peak in August 2006, according to the S&P/Case-Shiller Home Price Index released in May, with values falling back to 2001 levels.
However, the index reveals that Denver experienced a relatively narrow swing in prices over the past decade, escaping the kind of steep declines seen in some other major U.S. metropolitan areas.
A Federal Housing Finance Agency index shows similar results. The agency’s Housing Price Index reported first-quarter prices in the Denver region dipped 1.4 percent from the same three-month period in 2010. That compares to a 3.1 percent drop nationally and 2.5 percent decline statewide.
Denver “has never had the highs or the lows as the other markets have had. It always has been consistent,” said Hank Bauer, an independent real estate broker who analyzes local housing statistics.
The metro area continues to deal with a spate of distressed homes in the aftermath of the recession but it is faring better than the rest of Colorado. Denver foreclosure filings fell 20.3 percent in May, with 1 in 475 housing units receiving notices, according to RealtyTrac.
That compares to a 33 percent drop in foreclosure filings nationally and 13.6 decrease in Colorado, where 1 in 518 units received notices statewide. Among the nation’s 100 largest metro areas, Denver ranked 58th in foreclosures last month.
“Stronger home prices are one reason metro Denver has avoided a foreclosure crisis like those in Nevada, California and Florida,” Patty Silverstein, chief economist of the Metro Denver Economic Development Corp., wrote in her 2011 economic forecast in January.
While foreclosure rates in the seven-county metro area declined from the peak reached during the recession, foreclosure filings remain above historic levels, Silverstein said. “Until job gains occur more quickly and home prices and sales rise more solidly, many metro Denver residents remain at risk of default.”
Real estate analysts attribute part of the drop in May sales to the end of the federal homebuyer tax credit, which boosted sales last spring. Since peaking in 2004, Denver has seen home sales decline each year, tumbling a total of 27.4 percent to 38,818 in 2010. That’s the lowest number of closed transactions in 15 years.
“We’re hanging in there. (Sales are) not as brisk as last year because of the tax credits,” said Justin Knoll, president of the Denver Board of Realtors.
This time of year, home shoppers typically find about 22,000 homes for sale in the Denver area. Last year, for example, monthly inventory peaked at nearly 24,000 residential properties in July.
What the market lacks is a solid supply of move-in ready inventory, local real estate professionals say.
“We’re begging for good inventory. We know the banks are sitting on a ton of properties. We’re hearing a lot of consumers saying ‘We’re going to try this summer to sell our house.’ ”
Knoll said sales for homes priced in the $200,000 to $250,000 are still moving, especially in central Denver. “What we’re experiencing is a fast-paced market in the lower-end (properties).”
“Those buyers out there are not interested in the fixer-uppers,” Bauer said.
The local economy also could play a role in the seller reluctance. For months, Denver residents have been waiting for economic direction from city political leaders. That started to emerge after the June 7 runoff election for mayor, won by city councilman and former Urban League executive Michael Hancock.
“Our job numbers are kind of up and down. The political state of flux is playing a role in the Denver economy,” Knoll said.
Real estate professionals are counting on the market to pick up during the prime summer season. They note that Colorado and the Mile High City remain attractive destinations for homebuyers.
Indeed, the Denver region anticipates a net migration of 17,673 people this year, many of whom are highly educated workers relocating from states such as California, Texas, Arizona and Florida, according to the Metro Denver EDC. By 2030, the region’s population is predicted to increase more than 30 percent to nearly 3.8 million residents.
“Colorado has a very unique lifestyle — the plains, mountains and large and small cities,” Bauer said.
Economist Silverstein forecasts a modest 2 percent increase in home prices and 9.5 percent gain in sales this year. Bauer predicts home prices will increase 1 to 2 percent, with home sales rising 3 to 4 percent in 2011. “This is going to be a nice, positive year,” he said. read more . . .
Source: http://www.Inman.com
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