The number of Denver-area homes placed under contract in September fell 30.3 percent from September 2009, the biggest year-over-year percentage drop on record.
The report released today by independent broker Gary Bauer, who basis his monthly report on Metrolist data, showed there were 3,645 homes placed under contract in September, compared with 5,228 in September 2009. Under contracts were down 8.1 percent from August, when there were 3,966.
In the first nine months of the year there were 38,814 homes placed under contract, compared with 44,791 in the first three quarters of 2009, an 11.1 percent drop.
Closings off 23.1 percent
Closings, by contrast, did not show such a big drop off.
Last month, there were 2,958 home closings, a 23.1 percent drop from the 3,846 in September 2009, and a 3.9 percent drop from the 3,979 in August. In the first nine months, there were 30,286 closings, a 4 percent drop from the 31,554 during the same time period last year.
Downturn reflects season, economy
“I expected September to be slow,” Bauer said. “The economy and seasonality reigned. The economy is soft and consumer confidence is low. The consumer is focused on today and not really looking at tomorrow. In my words, they are hunkering down.” Other outside factors impacting the local Denver-area market include the mid-term elections, less than a month away, and the national unemployment rate released today, which was unchanged at 9.6 percent.
He expects the market to remain sluggish for the remainder of the year. “There is no light at the end of the tunnel,” Bauer said.
On the other hand, mortgage rates are at record lows, averaging about 4.25 percent for a 30-year-fixed loan and 3.75 percent for a 15-year mortgage. “They are just amazing,” Bauer said.
Despite the record-low mortgage rates and affordable housing prices, there is no urgency in the market, said Xenia Matteson, a broker with RE/MAX Alliance Central.
Still, borrowers will bite, if the home is priced at the market, she said.
“It’s a beauty contest and a price war,” Matteson said. “This is not the time to try to test the market.”
Price homes to sell
For example, she said she previewed more than a dozen large homes before putting a home in Littleton on the market for $1.2 million, and quickly had a contract, since it was priced right. At the other end of the spectrum, she also quickly sold a home for $165,000 at Pecos Street and West 36th Avenue in northwest Denver.
Meanwhile, the average and median-prices of homes sold and closed last month rose from September 2009, but are down from August. The mix of homes can impact the prices, especially on a month-to-month basis.
The average price of a single-family home was $290,025 in September, down 1.8 percent from $295,516 in August, but up 5.7 percent from $274,433 in September 2009. Year-to-date, the average price of a home closed was $282,416, up more than 7 percent from $263,518 in the first nine months of 2009.
The median price of a single-family home was $230,000, compared with $225,000 in September 2009 and $239,900 in August.
And the number of unsold homes on the market rose 17.6 percent to 23,332 (including pending sales) from 19,834 in September 2009. However, if pending sales aren’t included, the number of unsold homes on the market last month fell to 22,800, which is still 15.3 percent more active listings on the market compared with a year earlier. The inventory of unsold homes was largely unchanged from August.
Overall, showings are down and “it has been a quieter than normal summer,” Matteson said. “But there are a lot of opportunities out there with short sales and foreclosures. There is no tax-credit deadline anymore for first-time home buyers, but there are deals out there for buyers who are patient. But if someone wants to sell their home, they have to check out the competition and price it right.”
Dave DeElana, a broker with Coldwell Banker, said he represents a number of clients who have moved out-of-state, many of them to the Washington, D.C, area to take jobs with the Department of Defense and other government agencies. Their Denver-area are sitting vacant.
“It could be a long winter,” DeElana said.
Not even super-low mortgage rates are convincing people to sign on the dotted line.
“I think that interest rates can only drive the public interest to a certain degree,” DeElana said. “Job uncertainty has a greater impact by far.”
He said clients unable to sell their homes who have left the Denver area either are renting homes out-of-state, or have moved in with family.
“If they can’t sell their homes, I’ve advised some of them to take their homes off the market around Thanksgiving and before the Christmas holidays,” DeElana said. “The number of people who are going to buy homes at that time are pretty slim. And those people who are looking to buy homes during the holiday season are really looking for bargain-basement prices.”
Bucking the trend
But Dee Chirafisi, co-owner of Kentwood City Properties, said she is surprised that the market is as gloomy as the overall numbers show, because her company had a good September.
“I would say that we had a very strong September with over $31 million in closed sales,” said Chirafisi, whose company focuses on downtown and surrounding neighborhoods.
“This is a very strong month and I think we are bucking the trend because if our diversity in price ranges and neighborhoods and property types,” which included single family homes, condos and commercial properties.