- Economist Patty Silverstein releases report for the Metro Denver EDC.
- Silverstein predicts record home closings this year.
- Prices will probably be up, but closings down next year, she says
Economist Patty Silverstein is projecting that home closings in the Denver area will hit a record 55,500 this year.
The previous record was set in 2004, when there were 53,482 closings, according to Metrolist.
If Silverstein is correct, closings will be almost 20 percent higher in 2013 than the 46,299 reported by Metrolist in 2012.
Silverstein said the Denver-area housing market has recovered nicely from the Great Recession that began in late 2008.
“I’m kind of pinching myself,” Silverstein said. “Is this really the positive track we are on?”
The answer is yes, she said.
Pent-up demand, historically low interest rates and an improving economy are the driving forces behind the improving market, she said.
“We had almost a four-year period where home sales were kind of depressed and that has led to a lot of pent-up demand,” she said.
“I think there are also a lot of folks out there who have been trying to take advantage of the incredibly low interest rates we have experienced,” Silverstein added.
Meanwhile, Denver’s economy is out-pacing the nation’s, making it easier for consumers to buy a home, she said.
The Denver area added 62,000 jobs in 2011 2012, after losing 68,000 jobs in 2009 and 2010.
With increased economic momentum in 2013, Silverstein anticipates employment to increase by 3 percent this year, resulting in the addition of 42,400 new jobs. Along with increasing sales, homes prices also are rising. The median price of a single-family, detached home in the Denver area is up about 9 percent on a year-over-year basis, she said.
The Denver-Aurora metropolitan statistical area ranked 19th out of the 163 metro areas surveyed by the NAR in the second quarter, while Boulder was the seventh highest, she notes in her report.
“As the price differential between Metro Denver and th United States widens, there is concern that Metro Denver will once again be viewed as an expensive market,” she wrote in the report.
“However, prices in Metro Denver have been much more stable than other parts of the country, making home ownership in the region attractive.”
Silverstein projects that closings will cool next year, but home prices will continue to rise at a more modest rate.
“Prices and sales have increased at a pretty fast clip, which has been pretty amazing,” but it probably is not sustainable, she said.
“We still have just under a three-month supply of homes on the market, up from under a two-month supply,” Niederman said.
“We’ve gone from a frenzied market to a strong market and now maybe we will have more of a normal market,” Niederman aid.
The surge in home prices was good on a short-term basis, “because it helped people who had been under water on their mortgages transact real estate,” he said.
However, such increases are neither wanted nor likely, he said.
“I think we will see something more in the 3 percent to 5 percent range,” in 2014, as far as home prices rising.
“The numbers I am looking at show we are up about 20 percent year-over-year in closings and up 8 percent to 9 percent on prices,” Mygatt said.
“I don’t know if we can sustain that pace for the rest of the year,” he said.
He said around a 15 percent year-over-year increase might be more realistic.
“We should be getting a bounce in the market right about now, which would take us through October, before the normal seasonal slow down in November and December,” Mygatt said.
“I think a lot of people are anxiously watching the to see if we have that bounce this year.”
Also, the record rainfall last week could not only slow the housing sales market in some of the harder hit communities in the coming months, but for many months in the future, he said.
Residential Real Estate Snapshot 2011 2012 2013 (estimate.
Home Sales (closed) 39,387 46,299 55,500
Unsold Homes on Market (July) 17,583 10,827 10,025
Residential Building Permits 6,367 9,637 12,200
Single-Family Detached permits 3,525 5,371 7,300
Single-Family Attached Permits 834 1,026 1,200
Multifamily Permits 2,008 3,240 3,700
Median Home Price Metro Denver $231,400 $252,400 $275,000
National $166,200 $177,200 $192,000
Sources: Metrolist, Home Builders Association of Metro Denver, National Association of Realtors
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