John Rebchook is a former Rocky Mountain News reporter with more than 30 years of experience in writing and communications... Vote in a poll at the end of this blog
This may come as a shock to people struggling to sell their homes in the Denver area, as well as Realtors listing homes, but in May, homes on average sold faster in Denver than any place in the nation, according to an analysis of 146 metropolitan areas tracked by Realtor.com.
May marked the second consecutive month that Denver had the boasting rights as the No. 1 metropolitan area for home sales speed in the country, according to Realtor.com, which is owned by the National Association of Realtors.
Steve Holben, who built this home at 3070 S. Jackson St., thinks home bargains abound, but that can change quicker than many think.
The Realtor.com report shows that it took only an average of 39 days to sell a home in the Denver area in May. That is 11.4 percent faster than the 44 days it took in April.
The national average was 92 days on the market in May, 58 percent more days on the market than in Denver. Nationally, the time it took to sell a home rose by 4.5 percent from a year earlier. In Denver, however, the time to sell a home is down 2.5 percent from May 2010.
Metrolist uses different methodology
By contrast, Metrolist last month showed that it took an average to sell 109 days to sell a home in the Denver area.
However, Realtor.com, in its fine-print, said that it is to be expected that their data may differ from days on the market calculated by the local Multiple Listing Service in any given area. That is because Realtor.com calculates the median age of the inventory to come up with its sales rate, and not the average of the total universe of homes on the market.
I proposed to independent broker Gary Bauer that if a Realtor told a home seller that it would take only 39 days sell their home, the seller would ask what the Realtor is smoking.
Bauer’s answer was much more diplomatic.
“If you are listing a home and the owners ask you how long you think it will take to sell it, and you tell them that Realtor.com says it takes 40 days, you are setting up a totally unrealistic expectation,” Bauer said.
Still, it is the trend that is important, not the exact numbers, he said.
“It is very positive we are No. 1,” Bauer said. “I’m from the school as long as they use the same methodology across the markets, that they consistently apply it, it is important for establishing a trend line. That is more important than the actual data points.”
Bauer admits that he doesn’t think the Realtor.com methodology is superior to the way the average days on the market are more commonly tracked.
Low-priced homes are selling in a week
Bauer said that in the Denver area, lower-priced homes in good shape are flying off the shelf, taking only about a week to sell on average. The more expensive the home, the more time it languishes on the market. Bauer said he isn’t sure the Realtor.com methodology addresses that aspect of the market.
“I can’t say I am enthralled by their methodology,” Bauer said. “But it is a valid methodology, if done consistently.”
He also said that the unseasonably low inventory of unsold homes on the Denver market may be influencing the Realtor.com methodology.
Last month, there were 19,573 unsold homes on the market.
“That is the lowest it has been for a May in many, many years,” Bauer said. “We have not seen the typical seasonal increase in inventory so far.”
Also, Bauer included the 1,685 homes categorized as “pending,” a relatively new category by Metrolist, into the active inventory. Excluding the pending homes, the inventory would be even lower, at 17,888.
Market dynamics can turn on a dime
However, custom homebuilder Steve Holben said that he thinks the No. 1 ranking of the Denver area by Realtor.com is a more accurate assessment of the market than much of the other doom and gloom reports in the press.
Steve Holben, who has been involved in Denver real estate for the past 34 years, thinks the Realtor.com report more accurately reflects what is happening in Denver than many other negative housing reports.
“I’ve always felt that Denver’s real estate market is better than the “wisdom from afar” “experts” express,” Holben said. “All real estate is local, and you can’t tell me these people who have never laid eyes on the properties they “value” can be accurate.”
For example, market-rate homes are not facing the overwhelming competition from foreclosures as many believe, he said.
Holben said there are about 178,000 single-family homes and condos in the Denver area. Of those, about 2,500 of them are in some stage of foreclosure.
“That’s less than 1.5 percent,” Holben said. “That seems pretty healthy to me.”
Holben does think buyers can snap up incredible bargains. And the quicker the public takes advantage of low prices, the faster the market is going to change from a buyer’s paradise to one where sellers can demand and achieve higher prices.
“As a builder/broker in business since 1977, I’m seeing prices below replacement cost, and there simply won’t be any new building like what we’ve seen until prices increase,” Holben said. “With Denver’s population growing, there are some predicting a shortage of new inner city homes later this year into next year.
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“I’ve always felt that Denver’s real estate market is better than the “wisdom from afar” “experts” express,” Holben said. “All real estate is local, and you can’t tell me these people who have never laid eyes on the properties they “value” can be accurate.”
Steve-at least 35% of all sales are either bank owned or short sales. Do you consider this a heathy market? If so, please explain why. Thanks.
Two seperate points. 1. They are selling faster than in other parts of the country. 2. There is simply no way to not look at a 1.5% foreclosure rate as indicative of stability. Any other business would kill to have a loss rate that low.
Thanks so much for sharing the local real estate trend data with your readers! We really appreciate it.
It’s important to clarify that we don’t calculate the median age of inventory to establish sales rates. Interesting thought, but not the reason we track and calculate data.
The local real estate trend data released each month to 146 markets is provided to help consumers and agents as they work together to successfully navigate their local market.
The reason we include the ‘fine print’ – so to speak – is to make sure everyone understands how the data is aggregated and analyzed, as well as to clarify why it may differ from local MLS data.
Why does it differ sometimes? Primarily because in these local market reports, Realtor.com only looks at single family homes, townhomes, co-ops and condos, whereas MLSs include all types of properties in their days on market calculations. Also, because median age of inventory in our reports account only for the days a listing is displayed on Realtor.com, it may differ from days on market calculated by the MLS where the listing is posted, etc.
Looking at the trends we released, we were excited to see that Denver moved up two spots in search rank to No. 17 in May. The median list price also increased month-over-month to $253,700, higher than the national median of $188,900.
The biggest problem for this market is not the number of homes that are in some form of foreclosure, but the number of homeowners in a negative equity position. Not everyone has the ability and balance sheet of Carmelo Anthony to be able to take a 60% haircut on their current home and buy another(Ok, perhaps, Mr Rebchook as well). As for the Denver market is, “selling faster than in other parts of the country” report from Realtor.com, I think it is very suspect. Realtor.com collects its data from each individual Multi-list for every MSA. For this report to mean anything, every MSA’s multi-list must report data the exact same way in order to compare the days on market. Denver metro’s MetroList has implemented the “pending home” status. This in itself would lower the days on market. Before the Pending home category, a home might have been listed as active for months while the bank decided if they wanted to accept the offer. Now it might only show 7 days, rather than 180 days. If the other MSA don’t use a Pending category and homes are still listed as active the whole repot is useless as a comparison tool. As for your last point, ” There is simply no way to not look at a 1.5% foreclosure rate as indicative of stability. Any other business would kill to have a loss rate that low.” I’m sure the people at Fannie and Freddie are sitting aound their corporate offices talking about lucky they are that Colorado, the 10th worst state in the number of foreclosures as a percentage of total homes, is in such fine heath.
It is a pretty incredible, but a valid piece of information. In many respects it comes down to the old laws of suppy and demand.
It is true of the lower price ranges carrying the lion’s share of the speedy sales time. However, because of the lower supply factor, most prioe ranges(and areas) are selling well if the house looks good and the price seems reasonable. Gary Bauer’s inventory of over 19,000 is inclusive of both single family homes as well as condo’s.
I agree with Steve Holben about the incredible bargains in the real estate market. At whatever point the public recognizes what values are available, it may have already started edging its way out of a buyers market.
Unfortunately, we have all fallen victim to falling asleep with these prices, and maybe more importantly, today’s interest rates in the 4.5% to 5% range. You can be sure that as demand increases for housing(and consequently mortgages), that prices as well as interest rates will be headed north. In the future, we will suddenly wake up and realize that the current market really was a “dream”.
In furtherance of my thinking on housing prices. Within the last 2 months Wall Street Journal has published 2 articles pointing out that the “statistical data” that the “wisdom from afar experts” I mentioned use is becoming more and more suspect. I think a case can be made that housing prices have been beaten down way too far, and that this whole “housing crisis” has simply turned into an irrational media driven chicken little witch hunt. Happy to explain my case to anyone.
Steve-In the current housing market, the equilibrium price is determines less by factors you speak about(i.e. population growth, replacement cost, household formation) rather by the cost and availability of credit. For example, put availability of credit on a line graph with one end being no financing available (all cash buyer’s) and on the other extreme 2006-08 lending standards, zero down, 500 FICO, NINA(no income no assets needed) and no lender recourse. What do you think would happen to prices if no lending was available? You could have thousands of families moving to Denver each month with homes priced well below replacement cost and prices would fall. On the other hand, with extremely lax lending standards prices would rise even if population fell and homes were selling well above replacement cost due to increased homeownership rates and speculation. The problem with this market is, 100,000-200,000 of Colorado homeowner have been foreclosed on or did a short sale in the last 4 years. This in effect, relegates this group of people to all cash buyers, due to the lack of available credit. When credit tightened prices fall. These people will not be able to buy for a min of 3 year after they left their home(although, I think 5 year is more likely due to low credit scores). There are two types of demand with housing, demand and the ability to act upon the demand you have. I know there is plenty of pent up demand out there of homeowners who would love to move up, but due to lack of equity can’t. These are the factors that is keeping this market weak and will continue to do so until the credit situations of the homeowners the went through foreclosure or short sale improve. The only issue with this is, the longer this take the more homeowners go into foreclosure or a short sale. It’s is a vicious cycle.
The laws of Supply and Demand will determine if the Denver MLS figures are accurate as they have noted. The brokers and the home builders agree that the MLS statistics, as accurate as they can pinpoint, are still far below the norm of 2006. And the sales will increase when the supply is increased as the Denver market moves forward but the pricing and interest rate changes will affect it to the detriment of the buyers.
Since when is 2006 the norm of Denver’s stats? This time frame is in the middle of the subprime/ no money down frenzy.
And the sales will increase when the supply is increased as the Denver market moves forward but the pricing and interest rate changes will affect it to the detriment of the buyers.
Where have I heard this before? Oh yea, I forgot, it’s always a good time to buy a home. You are beginning to remind me of the church preacher that predicted the world was going to end May 21 at 5pm. On May 22nd, he came out and said, he made a math mistake and the world is going to end Nov 21st now. I’m sure we will hear the same story from him on November 22nd. One year ago mortgage rates and home prices were higher and you were saying the same thing, you better buy now before rates rise and prices fall. Just like the world will end at some point in time, this real estate market will improve. It just won’t be soon. This will take time to work itself out.
On a lighter note is is funny to look back 1 year ago on John’s blog page. Jacquie, Steve Holben and I all of our comments a year ago are almost identical to what we said on this page. At least we are all consistent!
http://insiderealestatenews.com/2010/07/million-dollar-home-showings-rise/
My wife and I are first time homebuyers. We are shopping in the $165k to $175k price range. We looked in the Cole neighborhood downtown and all over Arvada (80002, 80003, 80004, 80005). We bid on one foreclosure that had three bidders and ended up selling for more than the asking price. Every other normal sale house we really liked is under contract. We are under contract on a house that was only on the market for 2 weeks. I would say in our price range, I felt like there was a lot of competition for homes. In the end, we were able to buy a house and lot size we wanted, in the area and school district that we wanted for the price we wanted. However, it wasn’t as easy as I thought it was going to be.
As a professional home stager in the Denver area, we have definitely seen our staged homes sell very quickly; many within days of staging. I am in agreement with Gary Bauer in that the higher priced homes do take longer to sell. I also just sold my personal home and purchased another. Our home sold in just 12 days, but it took much longer to find what we wanted for the price we were willing to pay. We were definitely looking for a “deal” and were surprised with both banks and homeowners holding steadfast to asking price. In the end we did find exactly what we wanted for a realistic price.
I am glad to know that REALTOR.com includes only “single family homes, townhomes, co-ops and condos,” since that’s what my market consists of, and I would say a good many other brokers as well. Anecdotally I’ve noticed over the last two months that what Josh says is true in my experience, including the mid-price range of $400-600,000. I just emailed a client who’s coming to look at their 3 top choices (husband saw them last week) and to add a few more, that the others I had thought we could look at are gone, and she’s limited to the original three. That’s just today’s experience. I have heard other brokers say the same. The market for good homes, in good locations, priced right seems to be very competitive right now.
The interesting bit about “Denver” Metrolist statistics is that they freely admit they have close to 3000 properties in their database from around the state. Those properties skew the results of any of there data based reports.