The Metro Denver real estate market continued its active pace in January/2013 as single family homes and attached unit sales outpaced January/2012 sales. Single family home sales were UP 14.93% (785 vs. 683). Attached unit sales were UP 41.12% (350 vs. 248). The collective market was UP 21.91%. Sales figures for January/2013 approached January/2007 sales numbers.
The inventory of available properties will increase as winter melds into spring and the real estate market gains momentum. Available inventory will be the key to how active the Metro Denver real estate market is in 2013. January/2013 ended the month with nearly 40% FEWER active single family homes on the market compared to the end of January/2012 (1410 vs. 2334). When you take January/2011 into consideration, there were 68% FEWER single family homes available at the end of January/2013 (1410 vs. 4426). The past two years have seen buyer activity increase swallowing-up available inventory. Expect this pattern to continue throughout 2013.
On the financing side, the Federal Reserve has indicated they are going to keep lending rates at historic lows through the balance of 2013 and into 2014. The Fed’s goal is to get the national economy stabilized and then growing at a reasonable rate. National unemployment rates have dipped to slightly under 8%. Colorado’s unemployment rate has pretty much mirrored the national rate for the past five years.
When the Metro Denver and Northern Colorado real estate market was HOT back in 2004 through 2007, the Colorado unemployment rate had dipped below 4%. The national rate dropped to around 4.5% at that time. In its August/2012 economic forecast, the Congressional Budget Office (CBO) estimated the unemployment rate would be 5.9% by 2017. Getting from there to below 4% again would require a Herculean effort on the part of the local, national and global economy.
But that’s the future. We have to deal with the realities of today. Here are some thoughts to chew-on in looking at the Metro Denver real estate market.
- It’s a seller’s market, especially at the entry-level. The Absorption Rate for Metro Denver at the end of January/2013 for single family homes was 56 days. That number at the end of January/2012 was 106 days. (The Absorption Rate is the length of time it would take the market to fully sell, assuming the same rate of sales activity and no new inventory entering the market.)
- If a property is priced competitively and in reasonable condition, multiple offers are now the norm. Short sale properties, especially, invite multiple offers.
- The upper end of the market is showing some resiliency. Driven by low mortgage interest rates and limited inventory.
- As buyer demand increases, home values follow suit. We’re seeing the trickle-up effect as mid-range and upper end homes are experiencing a positive movement in values.
- New home construction will continue to be a viable part of the housing market as the resale inventory dwindles and buyer motivation increases.
In Metro Denver, the spring and early summer are characteristically the busiest time of the year with home closings peaking in the March through August period.