The trend of a plunging inventory of Denver-area homes continued in April, as prospective home buyers had 42.5 percent fewer homes to choose from than a year earlier, according to a report released today.
The decline in inventory in April comes as more buyers are shopping for homes, driving up prices, with bidding wars becoming increasingly common.
“We continue to see tight inventory in the market, which means there about a two- to three-month of supply available,” said Kirby Slunaker, president and CEO of Metrolist. “Conditions are favorable and we continue to look for signs of improvement such as continued price appreciation.”
There were only 10,254 unsold homes on the market in April, according to reports by Metrolist and independent broker Gary Bauer, who analyzed the Metrolist data. There were 17,847 unsold homes available in April 2011. The inventory declined 0.7 percent from 10,325 houses in March.
The shortage of homes is “what I am living and breathing,” said Rey Armendariz, an 8z broker in Westminster.
“It is the biggest challenge for buyers in the market,” he said.
He said the shortage, previously confined to low-priced homes, now is “up to $1 million, or even more than that.”
He is representing one buyer looking for a home in the $800,000 range in Greenwood Village, the Cherry Hills area Denver, “and I’m even looking in Westminster now,” he said.
It is even tougher for buyers shopping for houses priced below $380,000, he said.
“They are just champing at the bit,” he said. “My advice to serious buyers right now is to have all of your financing lined up and be ready to step up the plate if you find a home that you like. You have to make a quick decision, because a lot of houses are seeing multiple offers.”
In addition to the low inventory numbers, most metrics are showing a strengthening market:
- There were 5,681 total homes place under contract in April, 19.6 percent increase from the 4,749 a year earlier and a 6.6 percent increase from March.
- There were 3,891 closings last month, a 13.5 percent increase from the 3,429 in April 2011 and 12 percent more than the 3,475 in March.
- The average price of a single-family home sold in April was $298,712, up 9.8 percent from $271,969 in April 2011 and up 5.2 percent from $284,035 in March.
- The median price of a single-family home sold in April was $249,900, up 12.64 percent from $222,00 in April 2011 and up 7.5 percent from $232,500 in March.
“While the shortage of homes is a bit of a concern, overall, the market is showing early signs of a great year,” Bauer said.
Buying off the top
He said people who are thinking of putting their homes on the market now, will benefit from more than supply and demand.
Many sales are resulting from “buying off the top,” of recent listings, while homes that have been on the market for many months are often still languishing, he said.
Bauer also said that buyers want homes in turn-key homes.
“Most buyers want to move in and go on with their lives,” Bauer said. “They aren’t interested in buying homes that need a lot of work, for the most part.”
Peter Niederman, CEO of Kentwood Real Estate, said the market is progressing the way he predicted. He said he thinks that the next S&P/Case-Shiller report, which is closely watched, will show a great improvement for the Denver area.
“As we are starting to see nice, steady price appreciation, people who might have been upside down on their loans by 5 or 6 percent might be helped significantly and will finally be able to justify putting their homes on the market. That could signal more listings.”
Historically low rates
Although mortgage rates hit an all-time low of about 3.8 percent for a 30-year, fixed-interest rate today, Niederman said they aren’t going to help that much.
“Rates have been around 4 percent for too long for an incremental drop to help much,” Niederman said. “If they had been at 8 percent and were falling, it would be a different story. Right now, we need more economic growth, not lower rates. But I do like that we are creating jobs in the Denver area and consumer confidence is up.”
Niederman said showings and open houses also are up dramatically at Kentwood and he suspects that it the case across the market.
“Showings are a leading indicator,” Niederman said. “You don’t write contracts until people have walked through houses.”
12 showing in one day – twice
Lydia Lin, owner of One Realty, twice last month had days when she showed 12 homes each day.
“Denver in an incredible market,” Lin wrote on her Facebook page.
Scott Webber, owner of Fuller Sotheby’s International Realty, agrees.
“One thing I have no doubt about, is that Denver is one of the strongest markets in the country,” Webber said.
But the speed the market has changed from a strong buyer’s market to one that is increasingly favoring sellers is mind-boggling.
“It’s unreal. It’s unreal,” Webber said.
And it may not last.
“I think we in a little bit of a unique place,” Webber said. “I think a lot of sellers have been waiting on the sidelines will now feel more comfortable about listing their homes and there will be more foreclosures coming on the market.”
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