Denver Market Statistics Are Changing

Our broker keeps up informed of the lateset news, market trends and mortgage information. This week she forwarded a market study on to me that I want to share.

A study by the Denver area MetroList shows listing inventory drops 18.733% in one year from September 2007. This is the lowest September inventory since 2004.

The inventory reduction is a continuing trend that brings inventory levels down this year. These types of inventory reductions cause the buyers to change their buyer patterns from the last three years. When choices of homes are reduced, buyer behavior increases to make housing choices faster. As buyers make housing choices at a quicker pace, the number of sales will grow faster than the number of new active listings coming on the market, which will result in appreciation of homes.

Watch this inventory number go below 22,000 by January of 2009 and remain at lower levels through 2009 over previous years.

Sold data continues to be the slower indicator of a rebounding market and as of August the number of properties closed still has not yet caught up with the lower inventory and higher under contract data lines. This fall season will start to see year over year changes where 2008 and 2009 will outperform the previous year. The yearly figures for sold data follow a similar trend.

If we annualize these numbers we predict the Denver marketplace will expect to close 42,871 units for 2008. This number reflects a 6.015% decline from 2007 and will be the 5^th year in a row of declining sold data for homes. This might sound gloomy but it actually reflects that we have already hit the bottom and 2009 will be the year of appreciation as inventories continue to decrease and home buyers have a change in their behavior to move quicker into the market.

For Buyers, the shrinking inventory will provide fewer choices. The current absorption rate for homes below $500,000 is 5.985 months.

For Sellers, if you own a home below $500,000 it is good news as your home will be able to stand out as there is not as much competition, but since real estate is localized to the neighborhoods, you must see where you are positioned against other properties in you sub area. For homes above $500,000 sellers must be the first priced home the buyers will find and must be in move in condition to attract the buyers looking for homes above $500,000 in todays market.

There is approximately a 22 month supply above $500, 000. This will start to drop fast and get more in the 13-14 month range by December, as homeowners in these price points will take their homes off the market if they are not selling.

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