Real Estate News: The State Of Single Family Homes + Condos
I would like to describe the most recent Market Snapshot to give you an update on the state of the market. This month we’re going to walk through three metrics, which are single family + condo homes, single family homes, and condos to give you a better understanding of what the numbers mean and how you should use them if you’re looking to buy or sell real estate.
The Market Snapshot information from the Denver Metro Association of Realtors shows two different time periods, Prior Month and Year-Over-Year. Prior Month compares the most recent month to the month before (e.g. Oct ’19 vs. Sept. ’19). Year-Over-Year compares the prior month to the same month one year ago (e.g. Oct ’19 vs. Oct. ’18).
An important point to note is that there are definite seasonal differences in real estate so using month-month comparison trends can be somewhat misleading. For example, we expect fewer properties to come on the market during the Fall and Winter and more listings during the Spring and Summer. So, one word of caution, don’t get too caught up in month-to-month data. Review it, but the year-over-year data is more relevant, useful and instructive. We’ll focus on the year-over-year numbers below.
Residential (Single Family + Condo)
Up .21 percent. This is the number of active properties on the MLS. In other words, it’s almost exactly the same as last year. The number of Actives went up a tiny amount over the year to 8,557. The meaning is clear: we have almost no change in the market in the past year. Since demand (people wanting to buy houses) is outstripping supply (people selling houses) our only conclusion can be that the strong seller’s market will remain until that changes. So far, we have gone through years of continually decreasing inventory.
Up 1.63 percent. This is the number of homes that were actually sold in DMAR (the Denver Metro Association of Realtors) in the past year (4,654). This metric is closely related to Actives (above). Similar to Actives, there were close to the same number of properties put on the market last year, and despite everyone’s predictions, about the same number sold.
Why are so few home owners putting their homes up for sale, despite record high prices? Economics 101 suggests that as the prices rise, sellers would chase the dollars and sell their homes to capture the record high prices. But just the opposite has happened the past several years. As prices have risen, inventory has done the exact opposite and continued to drop or stayed very low.
Our best guess is that, while potential sellers understand they can make a big profit on the sale of their home, they are worried they won’t be able to find their replacement house because of the tight inventory. This is not misplaced anxiety; it is reasonable and logical. The result has been a multi-year cycle of fewer sellers willing to take a risk looking for a replacement home, leading to fewer sellers putting their home on the market, leading to less inventory of homes for sale, leading to increased anxiety of looking for a replacement home, and on and on. When this cycle will end is anyone’s guess, but I’m not expecting it to end anytime soon.
Sold Price – Average
Up 3.54 percent to $486,390. This is the average sold price of all the single family properties sold in the past 12 months in Metro Denver. One might say the average home sold for 3.54 percent more this year than it did last year. Basically, it’s the amount of appreciations in the market. 3.54 percent is a healthy number.
Days on Market
Up 10 percent with an average of 33 days on market. 90 days is considered average so houses are still flying off the shelves. Sellers are still selling almost 3 times faster than usual so it is still a very strong market.
Sold Price – Median
Up 5.8 percent to $423,200. Median and average are closely related. Median means the center number. So a bunch of low-end properties pulls the median sold price down below average. But notice it climbed more than the average as the number of low-end properties decreases.