Real Estate News
If you’re a regular reader of my newsletter you know it’s a great way to get current with the state of the metro Denver real estate market. I like to provide you insights, opinions, observations, and most importantly, hard data to help you make one of the most important financial decisions of your life: whether to buy or sell a property. You may have noticed a theme in my newsletters over the years that I don’t jump on the latest rumor of interest rate increases (or decreases), the market being about to crash (or skyrocket), or any other hyperbolic screeds you see on so many other real estate blogs and newsletters. Just the facts, thanks – that’s my motto.
Now, that being said, I want to bring to your attention some recent data that does indeed have me looking very closely at the state of the real estate market. What I am going to show you is that the data looks a lot like a market slowing down – a market where it’s a little harder to sell and a little easier to buy a property than it was in the recent past. Time will tell if this is a just hiccup, or if this slowing will continue and begin to affect the multi-year bull real estate market. What is for sure is that the data is interesting and worth looking into.
Let’s begin with the September 2019 Data Snapshot provided by the Denver Metro Association of Realtors. What you see from the last year is a market with increased inventory, resulting in longer Days on Market. By no means should we be overly alarmed by this data. The market is still very strong – just not as strong as it was last year. The higher Days on Market is certainly what I would expect to be the precursor to a cooling market. A higher inventory of properties on the market will eventually lead to a market more favorable for buyers.
To put the inventory of homes for sale in better perspective, take a look at the chart below. The light purple shows the number of properties on the market in metro Denver every month going back to January 2008. The dark purple line shows the number of sales every month. What you saw during the downturn between 2008 and 2010 was an astronomical number of properties for sale (over 26,000 at its height!) which caused a huge buyer’s market and a crash in prices. Starting around 2010 and picking up in 2011 the inventory began falling and the market became balanced. Since 2012 there has been a dearth of properties on the market resulting in our super strong seller’s market. This is exactly how markets are supposed to work, ebbing and flowing over time.
Now, what you can see the past couple of months is an uptick in the inventory – a small but noticeable rise in the number of homes on the market. As a matter of fact, 9,350 properties on the market is the highest number we’ve seen in years. From the chart below you can see we still have historically low inventory, but if the number of homes on the market continues to rise over time to the 15,000-17,000 mark, we’ll sooner or later return to a balanced market.
The last graphic I want to show you is a metric that Your Castle invented years ago which compares the average number of showings per listing per month. Basically the higher the number, the stronger the real estate market. A higher number means there are either more showings per month, fewer listings on the market, or both. The opposite is also true. A lower number means either there are fewer showings per month, more listings, or both, which translates into a weaker market. What you see in this graph is that the number of showings/listing/month for 2019 (the light purple line) is pretty consistent, but just below the past few years.
So, putting all this data together would suggest that the market has lost a bit of its strength recently. No one (no matter they say!) knows for certain what will happen over the coming months and years but you can rest assured we’ll be tracking the Denver real estate market closely and reporting back to you every step of the way. Please give me a call if you want to chat more about this. I’m always happy to talk about our super exciting, ever-changing real estate market!
