John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... Last month was the strongest September since at least 2001 for the weekly sales rate.
The weekly sales rate, an often over-looked metric, is an important one for gauging the demand for housing, given the existing supply. For example, total sales were down slightly in September from August and a year earlier, but so is the supply, so the sales rate is up dramatically.
The weekly sales rate last month was 6.09 percent, according to a report released today by independent broker Gary Bauer, who prepares a monthly report on Denver-area housing activity based on Metrolist data. Metrolist tracks homes sold by area Realtors.
What that means is that more than 6 percent of the unsold homes, on average, were placed under contract each week in September. There were 19,834 unsold homes on the market last month, the lowest September inventory since 2001.
The sales rate, by contrast, was 5.09 percent in September 2008. The one percentage point may not seem like much, but it has risen by 19.6 percent from a year earlier.
“This underlines everything we have been saying about the Denver market,” said Bauer. “Yes, we have been impacted by the ‘Great Recession.’ But we have not lost our market. We still have consumers out there who are striving to realize the American Dream of home ownership.”
Bauer said he had one client who lived in a Northglen home that they bought about 40 years ago for about $12,000.
“They decided to put it on the market to see what would happen,” Bauer said. “If they didn’t get their asking price, they planned to put it back on the market in the spring. In the first six days (of the listing) we had 20-plus showings and put it under contract for the full asking price,” of about $155,000.
Indeed, many people seeking lower-priced homes are being out-bid, he and other brokers noted.
That is absolutely true, said Scott Nordby, co-owner of Innovative Real Estate.
“That is a true indication the market is turning,” Nordby said.
He said that the weekly sales rate is so high because of the $8,000 federal tax credit available to qualified first-time home buyers.
“What is fueling the market right now is the $8,00 tax credit,” Nordby said. “What we’re seeing is that everything under $200,000 is getting multiple offers and is selling for over the asking price. People are competing for them and out-bidding each other.” The low-end market also is being helped by interest rates hovering near their all-time lows, he said.
Homes priced under $250,000 have passed the bottom, and have appreciated from their lows of earlier this year, Nordby said.
“I think the true test will be what happens if they do not extend the tax credit? Will that cause the market to stall, or have enough low-end homes been sold to kick-start the market and keep it fueled?”
In the Denver-area, Nordby thinks the market “does not really need to have an extension of the $8,000 tax credit. I don’t think we need to jump start the low-end market, because so much of the low-end inventory has been depleted.”
However, what he would like to see is the tax credit increased to $15,000 and opened up to all buyers, to have a greater impact on the market. The market above $400,000 is completely stalled, and could use help from a more generous and broader-based tax credit, he said.
In an interesting twist, however, he said most low-end home sellers are not moving up to much bigger and more expensive homes as they have historically.
“We were talking about this yesterday,” Nordby said. “People who are selling a home for $200,000, are moving into a $230,000 home. Or maybe they’re selling a $230,000 home and buying another $230,000 home in a better neighborhood. They’re not selling a $250,000 home and buying a $400,000 home, like they used to do in the old day.”
But what he would like to see is the tax credit increased to $15,000 and opened up to all home buyers. The market above $400,000 is stalled and could use some help from a more generous and broader-based tax credit, he said.
On the supply side, Bauer said he is not surprised that it has dropped below 20,000 homes. For seasonal reasons, he expects the supply to continue to fall until it starts to increase in the spring, when more people take advantage of the start of the seasonally stronger home sales market.
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Year Sales Rate Unsold Homes on Market
2001 2.66% 19,180
2002 2.38% 23,370
2003 2.16% 26,071
2004 4.71% 26,976
2005 4.52% 27,200
2006 3.48% 31,450
2007 3.3% 30,335
2008 5.09 23,923
2009 6.09% 19,834
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.
New Health Bill Provisions Could Expand National Unemployment and Set back Housing Market Recovery.
In Addition To new Taxes, New Health Bill mandates could damage the Housing Market Recovery. Many Home Buyers May Not Qualify For Home Mortgages after The Expense Of Forced Private Health Insurance: more homeowners may default on mortgages because they cannot afford Forced Health Insurance.
Historically, fewer home-buyers, has lowered home selling prices and caused a reduction in property taxes collected by county governments. The current drop in home values and property taxes has forced many county governments to layoff workers and ask federal agencies for money, further increasing federal deficits: that may “worsen” if home buyers are thwarted by the costs of forced health insurance and penalties. It is Foreseeable related housing industry jobs like construction, finance and manufacturing may suffer higher unemployment.
Well written.
It is sad that families are not moving up into better homes.