This 3-bedroom, 3-bathroom home with 2,497 square feet of space, sold last month for $279,000, very close to the average price of a home sale in the Denver area in October, according to Metrolist.
Home buyers in the Denver-area closed on 4,095 single-family homes and condos in the Denver area in October, a 28.7 percent jump from the 3,183 sales in October 2011, according to a Metrolist report released today.
That marked the biggest percentage on a year-over-year basis in 20 years for an October. In October 1992, 3,054 homes were purchased, a 29.2 percent jump from the 2,364 in October 1991, according to the report released by Metrolist, as well as a separate analysis by independent broker Gary Bauer. Metrolist is the largest multiple listing service in Colorado. The 912 increase in home sales from October 2011, marked the largest number of actual homes trading hands on record on a year-over basis.
“It’s an absolutely spectacular month when you look at where we are seasonally,” said Peter Niederman, CEO of Kentwood Real Estate.
The market bucked a seasonal trend in October, said Lane Hornung, President and CEO of 8z Real Estate and COhomefinder.com.
“The market continues to get stronger, even as we move into the typically slower winter months,” Hornung said. “In fact, the market defied seasonality in October as closed sales, and even under contracts, ticked up, compared to September. Apparently, someone forgot to tell the market that it’s supposed to slow down this time of year.”
Last month was the best October in four years. There were 4,282 homes sold in October 2008, when the government was offering tax credits to first-time home buyers, boosting the sales market.
October also was a strong month for homes being placed under contract.
Buyers placed 4,624 homes under contract, a 20.3 percent jump from the 3,844 in October 2011, as well as a 4.2 percent gain from the 3,949 homes placed under contract in September. For seasonal reasons, home contracts often slow in October from September.
“Under contract numbers continue to look fairly robust, which should result in a continued positive move into November and December, especially compared with prior year sales figures,” said Kirby Slunaker, president and CEO of Metrolist. ”Denver continues to be a great market for home sales and activity.”
Bauer agreed.
“The normal seasonal adjustments for the fall season have not occurred as in the past years,” Bauer said. “Yes, the monthly transactions are less than the prime home selling/home buying season. Denver continues to show its strength in the home market. Buyer demand continues with no end in sight.”
In the first 10 months of the year, 49,429 homes were placed under contract in the metro areal 20 percent more than the 41,175 during the same period last year. A total of 39,207 homes closed through October, 18.2 percent more than the 33,163 in the first 10 months of last year. The closings this year represent $10.9 billion in dollar volume.
The average price of a home sold in October was $278,438, a 13.4 percent increase from $245,546 in October 2011, and only 1.4 down from $282,305 in September. Higher prices and more sales drove the sales volume in October to $1.1 billion, almost 46 percent higher than the $781.7 million in sales in October 2011.
The median price of a single-family home that sold in October was $255,000, 12.8 percent higher than the median price of $226,021 in October 2011. Year-to-date, the median price of a single-family home was $250,00, 8.8 percent higher than $229,820 during the same period in 2011.
Homes were selling faster, too.
The average days on market was 66 in October, a 35.3 percent drop from 103 in October 2011 and 3.1 percent down from 64 in September.
“Our outlook remains very positive,” Slunaker said. “The pipeline is looking good for November and December, with more than 39,000 units sold year to date and inventory still tight. I have to believe 2012 will close strong.”
Inventory, meanwhile, continued to shrink.
Metrolist reports a total of 9,719 residential properties for sale at the end of October, down 31.3 percent from 14,156 in October 2011 and down 7.2 percent from the 10,470 units available at the end of September.
“If the number of available homes continues to stay low and total days on market remains at historic lows, we’re looking at the potential for a very healthy sellers’ market closing out 2012,” Slunaker said.
Niederman said the low inventory is the biggest challenge facing the Denver-are market.
“When you start to look at historical charts, the drop in inventory is staggering,” Niederman said. “Low inventory is a big concern. I think the real question are when will it change and what will cause it to change? I don’t think anybody has a crystal ball as far as when it will change. It The catalyst for change may be more job creation and more consumer confidence.”
Despite rising prices, some consumers may still be too underwater to sell their homes. Others, may not be comfortable selling, because they are concerned about keeping their jobs, Niederman said.
“It may be economic uncertainty,” Niederman said. “Some people may be reluctant to put their home on the market until there is more certainty in the direction of the economy. Some people might be concerned that their taxes will go up, leaving them less money for other things. It’s just an unknown at this point.”
But Niederman said he didn’t think President Obama’s victory on Tuesday will have any immediate impact on the Denver-area housing market, nor would have had a Mitt Romney victory.
“It didn’t really matter whether Obama or Romney won,” Niederman said. “What we need is a plan to create more high paying jobs and lower the unemployment rate. The plan has not been laid out yet. The plan needs to get out in front of the people so they can sink their teeth into it and digest it.”
However, Niederman said home builders are filling the void created by the low inventory of resale homes on the market.
“Home builders, such as locally based M.D.C. Holdings (parent of Richmond Homes), are doing everything they can to get homes out of the ground,” Niederman said. “There is still a thirst for homes in the Denver area.”
Low mortgage rates have been a driving force in creating housing demand, he said.
“Money has never been this cheap before,” Niederman said. “It is unprecedented. But rates can’t go much lower. Banks put out mortgages 300 basis points above the Fed Fund Rate, which is at 25 basis points. So the lowest rates can go is 3.25 percent. A 30-year, fixed-rate now is at 3.5 percent for a strong borrower. So the floor is really 3.25 percent.”
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.
This is crazy.
Normally, in greater Denver, inventory has historically been about 6 months. With a fair amount of variance, but still, overall, 6.
Now it is 2 to 3 months.
Lots of wanna-be buyer pain coming.
Yes its similar to the ’90s. This is how the market was almost the whole decade.
Nice article, John!
Availability out here in Orange County is a major issue for agents a brokers. Any stability in the jobs market (statewide) could lead to a severe bump in pricing over the next quarter or two, imo.
inventory levels are crazy low!