The Denver-area housing market was hot in May.
The number of previously owned homes and closings rose by almost 24 percent from May 2011, while the average price of a single-family home closed last month topped $300,000 for the first time since 2007, shows a report released today. The number of unsold homes on the market dropped by almost 41 percent from a year earlier. The scant inventory has led to frequent bidding wars.
“This is the first full month of the prime selling season and it was a fantastic month,” said Gary Bauer, an independent Realtor, who released the report based on Metrolist statistics. ”Overall, we only have a three-month supply of inventory.”
Homes are selling fast. The average days on the market for all homes is 78 days, 27.7 percent lower than the 108 days a year ago.
Bauer used his southwest metro area neighborhood, Columbine Knolls, as a microcosm of the market. It’s about a 40-year-old subdivision with about 1,200 homes.
‘It’s not what you call a high-appreciation neighborhood, but people who live there like it and tend to stay for a long time,” Bauer said. “In May, 20 homes went on the market and 18 of them have been placed under contract. I’ve been talking to other Realtors and they are seeing the same thing.”
By the numbers, Bauer’s report shows:
- There were 5,908 homes placed under contract in may, 23.7 percent more than the 4,777 in May 2011. Contracts were up 4 percent from the 5,681 in April.
- There were 4,625 home closings in May, 23.9 percent more than the 3,732 in May 2011 and 18.9 percent more than the 3,891 in April.
- Year-to-date, there were 24,553 contracts signed, 23.2 percent more than the 19,937 in the first five months of 2011.
- Year-to-date, there were 16,956 closings, 14.9 percent more than the 14,755 in the first five months of 2011.
- The number of unsold homes on the market fell 40.8 percent to 10,591 in May from 17,888 in May 2011.
- The average price of a single-family home that closed in May was $307,896, 10.2 percent higher than a year earlier, when the average sales price was $279,443.
- The median sales price of a single-family home rose 12.2 percent to $258,000 from $230,000.
- The average price of a condo was $179,253, up 12 percent from $160,051 in May 2011.
- The median price of a condo was $144,330, up 16.8 percent from $123,525 in May 2011.
She placed a downtown condo under contract for the full asking price of $325,000. It was a condo that she had listed last year and there were no takers.
He highlighted more than a half-dozen metrics – including under contracts, closings, days on market average listing prices – that often showed percentage gains of more than 20 percent from a year ago.
“If you look at each one of these metrics individually, they are nothing short of spectacular,” Niederman said. “Typically, we might talk about one metric that is really strong. In May, just about every metric showed a dramatic percentage gain. If something rises from zero to 10 percent that is interesting. But it is truly great news when a metric is up by more than 20 percent.”
Despite the improving fundamentals, Niederman said it may not be all smooth-sailing ahead.
“We are not seeing any huge improvements in unemployment, locally or nationally, or in consumer confidence,” Niederman said. This is an election year and there are global concerns. These are all potential headwinds. Most of them are national or international events, out of our control. I’m not saying these headwinds will slow down the Denver housing market, but they could slow it.”
And while there is also a lot of pent-up demand from buyers who are eager to move and take advantage of mortgage rates hovering around 3.5 percent, buyers need the employment history and strong credit to take advantage of the conditions.
“You need an able and willing buyer,” Niederman said. “But while a lot of people are willing to buy, not everyone is able, maybe because they don’t have the work history or their home is still too deep under water to sell.”
Niederman also noted that some people have raised the issue of the “shadow market” of unsold homes being held by banks the could flood the market.
“We have been hearing about the shadow market for three or four years now and we haven’t seen it,” Niederman said. “I do believe it exists. But we have so little inventory right now that we could easily absorb more homes on the market. And I have seen no indication that lenders plan to dump all of these on the market at this once. Rather, I think they are going to wait for a tick-up in prices before they put them on the market, which could be a sizable increase in value for them.”
Also, there are lot of cash buyers eager to snap up distressed properties, he added.
David Binkowski, owner of Prudential Real Estate of the Rockies, said he has been telling his brokers for several months that the market has moved from a buyer’s market to a seller’s market – with a caveat.
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