Good News and Advice for Home Buyers and Sellers

There’s reason to be optimistic about the Denver-metro housing market; not only is The Meadows the top-selling new-home community in the region, there’s a lot of good news about the resale market here, too. Of the 7,502 homes under contract in Colorado, 92 percent of them are less than $500,000.

The following newsletter from a local realtor is chock-full of good news and sage advice for both home buyers and sellers.

How’s the Market? – July 2009

(Data provided by Metrolist, Inc. on July 6, 2009. Commentary provided by Cindy Bakula, Broker Associate, RE/MAX Professionals, LLC)

SOLD DATA
June 2009 had the highest percentage increase in sold properties from May to June of any year in the last 5 years!
Metro Denver Sold Properties in May and June of Each Year.

• June 2009 Sold Properties for Single Family Homes and Condos Increased 15.01% from May to June. This is the single largest percentage June increase over May in more than 5 years.
• In June 2005, the June over May increase was 14.24%, which represented the year with the most closings in Denver history.
• Although the June Sold data numbers are smaller than previous years, the increases are starting to catch up to earlier years totals and should surpass them later in 2009.
• The Denver Metro area is poised to close over 37,000 single family and condo properties for the year 2009.
• Year-to-date, single family homes sales under $500,000 represent 92.56% of all sales. However, the percentage of single family homes selling under $500,000 is decreasing from the beginning of the year, indicating properties above $500,000 are starting to sell at a slightly faster rate than earlier in 2009.
• Condo’s that are sold and closed below $500,000 make up 98.21% of all condo sales. This indicates the market is price sensitive above $500,000 for condominium units and the buyers are not buying this product at this time.
• There is a 3.44-month supply of single family homes priced from $0 to $250,000. Inventory is moving quickly.
• There is an 8.5-month supply of single family homes priced from $250,000 to $500,000.
• There is a 23.2-month supply of single family homes priced from $500,000 to $1 million.
• Single Family Homes priced above $1 million have a 63.1 month supply of inventory.
• Condominiums below $250,000 have a monthly supply of 6.25 months. This indicates the buyers buying are looking to single family homes vs. condos within this price range. However, look for condo’s priced below $250,000 to be the next boom price range as buyers will not find what they are looking for in single family homes below $250,000.
• There is a 27-month supply of condos above $250,000.
• A six-month supply of inventory typically creates an equilibrium between buyers wanting to buy and sellers wanting to sell.

What these numbers indicate for the first half of 2009 is that buyers looking for a single family home under $500,000 are plentiful. Any property outside of this price parameter needs to itself aggressively now to take advantage of the peak selling time.

UNDER-CONTRACT DATA
The number of homes under contract has remained constant with 7,502 single family and condo homes under contract for July 2009.

• Denver is still experiencing a little fragile marketplace as July “under contracts” decreased from June by 90 units. Not a big concern, but one to watch to make sure our pipeline of business remains in an upward growth.
• In four out of the last five years, July under contracts have decreased from June. This is an abnormality each year, and typically August will be higher than July.
• The percentage of properties under contract for single family homes is shifting a little higher each month, indicating the buyers’ willingness to buy properties above $500,000. We may be seeing the first uptick of homes selling faster that are priced above the conforming loan rates of $417,000.

AVAILABLE INVENTORY
Inventories in Denver are still the news. Currently there are 21,709 single family and condo homes active on the market.

• This is a decrease in inventory of 19.1% from 12 months ago.
• July inventory increased 162 units (or less than 1%) over June of this year. The increase is minimal. This is an indication that the Denver marketplace is already on the upswing of improving year over year, as we typically see inventory increases in July over June somewhere closer to 4%.
• Since April of 2009 through today, the single family inventory has grown only 1.1% over a 4-month period. This is the smallest increase of spring inventory in 10 years in the Denver area.
• There are only 16,000+ single family units for the entire marketplace.
• Denver Metro Area Single Family and Condo Inventory for July

ACTION PLAN FOR BUYERS AND SELLERS
What should sellers do in this market?

• Clearly Understand the Pricing Strategy Model of Price, Terms and Time.
• Know the supply and demand numbers for your home – metro-wide and in your neighborhood.
• Position your home as the first one to look at in your neighborhood.
• Do not reject low offers without a counter; reposition your home in the buyer’s eye.
• Make your home look like a model for every showing.
• Add an incentive to your package, like prepaying HOA dues for a period of time to attract the buyers.
• Take your equity later rather than now with owner carry terms that will attract buyers in a difficult lending market for upper end properties.
• Add carbon monoxide detectors to your homes vs. waiting for buyers to ask for them. (Ask me about new legislation that took effect July 1., 2009)

What should buyers do in this market?

• Know the Market in which you are buying. If you are buying a more expensive home, the only competition may be you. This is where significant deal making is occurring in Denver today.
• Get pre-approved for your loan. Make yourself look like a cash buyer with few contingencies to get the best deal.
• Terms are sometimes more important than a low price; have a pricing strategy to give you the best position.
• Lock in your rates! The market is volatile with rates moving around.
• Be prepared to be patient on certain available homes, such as short sales, foreclosed properties or sellers with little or no equity who have trouble giving buyers quick answers.
• Ask to have Carbon Monoxide detectors installed in your purchase that comply with the legislation that took effect July 1, 2009.