These are very special times in the metro Denver real estate market. Home prices are up, rents are up, inventories of homes both for sale and rent are low and our future outlook continues to look great. We talk about some aspect of real estate every month in this newsletter, but sometimes I think it can be hard to realize just how terrific our real estate market is without taking a step back and looking at the big picture. A great way to do this is to check out the recent press headlines and review the real estate news about our local market. In a word, it is amazing!

DENVER COUNTY HOME SELLERS MAKE OUT BIG IN Q3
Denver Post | 11/5/15
"Home sellers in Denver County made out big in the third quarter, where sellers sold for an average of a 41.5 percent gain over what they originally paid. That's according to research conducted by California housing data company RealtyTrac, which placed Denver County at No. 6 in the country for highest percentage sales gains. In September, RealtyTrac said Denver home sales were on pace to set a 10-year record, and median selling prices in Denver set an all-time high this summer."

CONDOS APPRECIATING MORE THAN SINGLE-FAMILY HOMES IN DENVER
Denver Business Journal  | 10/27/15
"Condos in Denver have appreciated nearly 20 percent over the past year, which is nearly four times the national average and well above the single-family home appreciation rate in Denver. According to Seattle online real estate company Zillow, single-family homes in Denver have appreciated 15.9 percent over the past year, while condos have appreciated 19.7 percent. The yearly 15.9 percent increase in Denver single-family home appreciation was the biggest jump in the country while the 19.7 percent annual increase in condo appreciation was the second-biggest jump in the country, trailing only the Dallas-Fort Worth area, which recorded a 20.1 percent annual increase in condo appreciation."

HOW DOES DENVER RATE AMONG NATION'S BEST PLACES TO OWN A HOME?
Denver Business Journal | 11/9/15
"Where's the best place in the country to own a home? Right here in Denver, according to a new report. Porch and Redfin created the new list, based on a survey of about 10,000 U.S. homeowners in 67 markets, and using criteria including: healthy living, commute, climate, educational opportunity, economic opportunity, resident satisfaction, walkability, security and safety, real estate confidence, and tax fairness. Denver did the best, ranking No. 1 in the country, in the categories of health living and climate, and coming in No. 2 in resident satisfaction."

DENVER REAL ESTATE MARKET GROWTH IS FOURTH HIGHEST IN U.S, SAYS NEW REPORT
Denver Business Journal | 10/26/15
"The Denver area residential real estate market experienced the fourth-highest increase in a new housing report. The Freddie Mac Multi-Indicator Market Index (MiMI) uses four indicators to track an area's residential real estate growth, including home purchase applications, payment-to-income ratios (changes in home purchasing power based on house prices, mortgage rates and household income), proportion of on-time mortgage payments in each market, and the local employment picture."

There wasn't room in this post to include all the recent articles, and the good news just keeps coming! For additional articles highlighting Denver real estate news, please contact me. 

If you're interested in learning about the real estate market and how you might take better advantage of it, whether you're looking to buy, sell, or invest, feel free to give me a call. I'd love to sit down with you, answer all your questions, and show you what's happening in our incredible real estate market!  

And as always, thank you for reading each month!  I truly appreciate you!

Denver home inventory continues to be at record low numbers in comparison to the last several years.  See the chart below.  This graphic visualizes number of homes sold vs available homes for sale in the Denver metro area.    

What does this mean for you?

For buyers:  The number of homes for sale is very low.  Therefore, the number of competing buyers per home is much higher than the "norm".   That means you'll most likely find yourself in a multiple offer situation competing with several other buyers for the same house - this situation is compounded in highly desirable neighborhoods.  As a buyer, you'll have to be very prepared mentally and financially to compete to win the house you love.  I'll post another article about being prepared as a buyer soon.

For sellers:  A low home inventory situation can create desirable conditions for selling a home.  Having more buyers competing for your home gives you the greatest opportunity to achieve the price and terms that are most favorable to you.  However, each specific area/neighborhood's market conditions must be individually evaluated to properly prepare for a sale.  Also, you must still adhere to the fundamentals of evaluating marketing, home condition, and price - these are essential to the home selling process and can never be ignored, regardless of market conditions.  I'll post another article about preparing a home for sale in the near future.   

The best way to really understand our real estate market is to take the time to dig deep and look at the numbers. Whether you're a home owner wanting to understand how your biggest investment is doing, a renter thinking about taking the plunge into home ownership, or a real estate investor looking for your next opportunity, understanding the market data is critical. So, this month I'm going to walk you through the Colorado Association of Realtors metro Denver quarterly snapshot, explaining each entry to help you make sense of our housing market. 

There are five columns in the chart:
Key Metric - self-explanatory
Historical Sparkbars - the data from 2011 to the present
Q3-2013 - the quarterly data from one year ago
Q3-2014 - the most current quarterly data
Percent Change - the yearly percentage difference
New Listings: -8.6 percent. The number of new listings continues to drop, leading to the extremely low inventory of housing in our market. Our supply/demand equation is somewhat out of whack with a huge number of buyers and very few sellers, which has led to our strong market and rising prices the past five years. 

Pending/Under Contract: +1.5 percent. There is virtually no change in this number. About the same number of properties has gone under contract this year as last year, but with a lower inventory of homes on the market keeping the inventory of available homes low.

Sold Listings: -7.8 percent. This number surprises a lot of people. Everyone thinks we're having this massively crazy up market and lots and lots of homes must be selling, but in fact it's not true. Because our inventory is so low - close to the lowest inventory per capita ever in metro Denver - there just isn't a big selection of homes to buy. The result being that the number of homes sold is down, not up, and by a significant number. 

Median Sales Price: +9.1 percent ($310,000). The median price is the middle price of all homes sold - not the average price. For example, if five homes were sold in an area at the following prices: $100,000, $200,000, $300,000, $800,000, and $900,000, the median priced home is $300,000, but the average priced home is $460,000. A 9.1 percent yearly price increase is strong, but not scary in my opinion. Over the past 40 years metro Denver home prices have increased on average 5.9 percent per year. 9.1 percent is significantly above average, a result of a lots demand for homes, not much supply, a strong employment market, a strong economy, etc. But it's not so high that it will lead to an unpleasant crash in prices, as is predicted in some of the cities currently rising at 15-17 percent per year. We're seeing price increases slow down a bit over the past several quarters which is healthy. 

Average Sales Price: +7.2 percent ($366,099). When the Average Sales Price is below the Median Sales Price it means that the lower end of the market is doing somewhat better than the higher end of the market, and of course the opposite is true as well. The fact that both yearly percentage changes are relatively similar means the market is more or less consistent both above and below the average and mean prices. 

Percentage of List Price Received: +0.1 percent (99.3 percent). A sign of a very strong market is when the final sales price compared to the list price is almost the same, as it currently is in our market. In a weak market buyers will try to lowball an offer and often get the property well below asking price, but in a market like ours, sellers are getting 99.3 percent of their asking price and that percentage is almost identical to what it was a year ago. This is another sign of a strong, healthy housing market. 

Days on Market: -21.1 percent (30 DOM). A normal market of balanced supply and demand will have about 90 days on market (which is the same as six months of inventory in case you run across that number). A stronger market will have fewer days on market, and vice versa. Thirty days on market is incredibly low. It means demand is very high for housing and sellers are selling their homes in near record time. Furthermore, the 21.1 percent drop in DOM means that the demand has increased relative to the supply of homes in the past year, making homes even easier to sell now than they were a year ago. If you have been out looking at homes recently you'll know what I mean. More and more often we run into other folks looking at the property at the same time because there are so few properties on the market and the buyer demand continues to increase. Smart buyers have learned to act quickly to get the home they want, driving the DOM even lower. 

Affordability Index: -6.8 percent. This index combines the metro Denver income trends with interest rates and local housing prices to calculate the proportion of local households that can afford the median priced house. The higher the Affordability Index the more affordable homes are. The Affordability Index was very low during the run up of prices that ended in 2007 when homes prices reached record highs. Homes were at all-time affordable highs during the downturn, peaking in 2011. Since then, prices have been increasing enough to lower the Affordability Index year-over-year, continuing with another 6.8% drop in the past 12 months. Buyers having been watching this number fall with dismay the past few years and I think this is one of the many reasons there is so much demand now; renters want to buy when homes are still relatively affordable as they are now (given ultra-low interest rates and strong wages) so we have yet more buyers jumping into the market.

Active Listings: -36.8 percent. The number of active listings has plummeted. In 2007 during the downturn we had over 31,000 homes on the market - a true buyer's market. Now it's the opposite. We had only 7,964 homes on the market at the time of this snapshot, an incredible plunge supporting our seller's market. If you've ever thought about selling, this is the type of market you'll want to sell in!

Months of Supply: -32.4 percent. Months of Supply is the corollary to Days on Market. The lower the Months of Supply, the lower the Days on Market. The 32.4 percent drop in the past year means our housing market continues to tighten as demand rises and supply falls pushing prices ever higher. 

If you're reading this you probably have at least a passing interest in real estate. The more you learn the more likely you'll make the right decision when it's time to make a move. I spend my life studying these figures and many others to try help you achieve your goals. Please feel free to contact me if you have any questions or if you'd like me to walk you through the data in specific areas/neighborhoods as well.   Have a great holiday season!!