PAUL'S REAL ESTATE NEWSLETTER – MARCH 2014
Dear Paul :
Welcome to the March edition of the 2014 Denver Real Estate Market Newsletter.
Has The Housing Recovery Stagnated?
Recent home sales reports from the National Association of Realtors (NAR) indicate that U.S. existing home sales have declined over the last several months. Media outlets have been quick to report that the housing recovery has stagnated. I don’t believe the recent sales reports tell the whole story. Taking a closer look at the data I believe we are seeing the market shift from ‘recovery’ to a steady, stable, sustainable real estate market, in other words, the real estate market has become healthier.
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What the media outlets are saying: U.S. home sales increased just 0.8% in the fourth quarter of 2014 and dropped 8.1% in the western U.S. Some media outlets attribute this drop to rising interest rates and a drop in consumer confidence.
What is actually happening:
- The south and north-east parts of the country actually saw relatively strong sales. If the housing recovery had stagnated because of rising interest rates and lower consumer confidence, then we should have seen home sales drop nation wide.
- The drop in home sales in the west was a result of a low inventory of homes for sale. There simply weren’t enough homes for buyers to buy.
What you need to know: Home sales in the western U.S. are expected to increase as inventories return to normal levels. As home prices recover to pre-recession levels millions of sellers now have positive equity in their homes and the option to list their homes for sale.
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What the media outlets are saying: The number of distressed home sales (bank owned homes and short sales) have dropped from 35% of total sales at the beginning of 2012 to just 15% of total sales at the beginning of 2014.
What is actually happening: Although the media is correct in saying that the number of distressed home sales have dropped significantly over the last two years, they aren’t telling you that the drop in distressed sales is partially responsible for the 8.1% drop in the western U.S. for the fourth quarter of 2013. With fewer distressed sales contributing to the inventory of homes for sale there are fewer homes for buyers to buy.
What you need to know: Banks have worked through much of their distressed sales inventory. The real estate market can behave ‘normally’ without the influence of distressed sales, in other words the market has become healthier.
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What the mass media is saying: Home sales in the western U.S. have dropped 8.1%.
What is actually happening: The number of non-distressed (‘normal’) sales have actually increased over the last 12 months.
• In January 2013, distressed sales made up 23% of total U.S. sales. Non-distressed (normal) sales accounted for 3.75M home sales.
• In January 2014, distressed sales made up only 15% of total U.S. sales. Non-distressed (normal) sales accounted for 3.93M home sales.
• The number of ‘normal’ sales increased 180,000 from January 2013 to January 2014.
What you need to know: As the number of distressed sales decline and ‘normal’ sales increase, we can expect a shift to a more steady, stable, sustainable real estate market.
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THE BOTTOM LINE: Media outlets are quick to report the real estate news without telling the whole story. As a real estate professional, I am able to decipher these statistics to help my clients understand the continuously shifting and often times confusing real estate market. Please call me whenever you have a real estate question. Don’t allow the purchase or sale of a home, one of the biggest financial decisions you may make, to be based on data that doesn’t tell the whole story or even worse, isn’t even relevant to our local market.
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MARCH 2014 REAL ESTATE MARKET TRENDS
DENVER REAL ESTATE MARKET TRENDS
REAL ESTATE NEWS
Metro Denver home sale prices up 6% in February compared to last year Read more…
Rising home prices cause drop in number of homes with negative equity Read more…
Parade of Homes August 7 through Labor Day 2014 Read more…
New apartment building in Union Station redevelopment area sold for $70 million Read more…
COMMERCIAL REAL ESTATE NEWS
Breckenridge Brewery to open in Littleton Read more…
Restoration Hardware plans flagship store at Cherry Creek Mall Read more…
INVESTOR NEWS
Denver investor home purchases up in January to 8.2% Read more…
FORECLOSURE NEWS
Colorado foreclosure numbers down 76.31% Read more…
Colorado foreclosure filings hit 9 year low in 2013 Read more…
ECONOMIC NEWS
Colorado unemployment down to 6.1% in January Read more…
Four companies receive incentives to attract hundreds of jobs to Colorado Read more…
Denver ranks number 8 for best cities to find a job Read more…
Denver ranked 6th in population and economic growth nationally Read more…
Northwestern Mutual to add 220 jobs in Denver in 2014 Read more…
Housing price gains contribute to 2.8% increase in consumer prices Read more…
Colorado new car registrations up 3% in January Read more…
Denver economy ‘firing on all cylinders’ Read more…
OTHER NEWS
Safeway and Albertson’s announce $9.4 billion merger deal Read more…
Avaya moving services group to Highlands Ranch Read more…
Denver named a finalist for 2016 Republican convention Read more…
CU to offer classes at Wildlife Experience museum in Douglas County Read more…
United Airlines cracks down on those supersized carry-ons Read more…
Denver Broncos raising ticket prices in 2014 Read more…
THANK YOU FOR YOUR BUSINESS AND REFERRALS!