And the trend continues! October sales figures showed positive gains in most areas as limited inventory and improved sales created opportunity for sellers. On the other hand, buyers were left scratching their heads wondering where the supposed “buyer’s” market went. Simply stated, buyers are having much greater difficulty finding suitable homes in 2011 as compared to 2010. First-time buyers are being increasingly priced out of the market as they compete with investors vying for lower priced properties that are also apt rentals. These properties sell in days, not weeks and as the old saying goes, the early bird catches the worm!
Overall Metro area sales increased 12% compared to October 2010 with buyers snapping up 3,183 homes and condos in October 2011. The number of properties under contract increased nearly 4% from the same time last year. At the same time, the inventory of single family homes fell 30% and condos followed suit with inventory falling over 45%! The only negative and unsettling trend is the value of homes dropping 6% from last year for an average sales price of $269,503. Of course we should all be glad we don’t live in Las Vegas where if you bought a house in 1996, it’s worth less today!
Why are values falling in Denver with such limited inventory and increased sales? I see three factors that are driving down prices: 1) Lower priced (sub $200K) properties are dominating sales right now as first-time buyers, investors and renters who are paying inflated rents realize the financial benefits of owning inexpensive homes, 2) Motivated sellers with average properties that are stagnating on the market. Once these sellers finally receive an offer, they agree to significantly reduced prices, and 3) Weak listing agents who aren’t educated about current market conditions and don’t fight for their sellers when negotiating offers.
There is no doubt we live in tumultuous times but fortunately our local Colorado real estate markets appear to be fairing better than the rest of the nation. At our current national job growth it will take 52 months to return to the number of jobs we had in January 2008. The good news for Colorado is that we have gained approximately 700 jobs over the past year while many states continue to lose them. Foreclosures continue to dominate many local markets, however foreclosure sales in Colorado fell to a 42 month low and were down 28% compared to October 2010. The key message here is that it is important to consider local economic conditions and take those into perspective whether you are homeowner, tenant, seller or buyer!
As always, we are up-to-date on the latest market happenings. Please don’t hesitate to contact us whenever you or someone you know is considering buying or selling a Denver loft, condo, or home!