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LOOKING FORWARD – DENVER’S SHIFTING REAL ESTATE MARKET

Before looking foward, we need to look back to where we have been.

2006 to 2011:  Prior to the Great Recession, Denver’s housing market peaked in the fall of 2006 followed by a double dip bottom in 2009 and 2011.  From the 2006 peak to the 2011 trough we witnessed a buyer’s market:

• Average home sold price dropped 22.8%
• Number of homes sold dropped 22.2%
• Distressed sales (bank owned and short sales) accounted for more than 33% of homes sold

• Denver’s average sold price appreciated over 30%,  above and beyond the pre-recession levels, one of only four cities in the nation to do so
• Inventory of homes available for sale plummeted by 63%
• Number of homes sold increased 30%
• Days on market dropped nearly 74%
• Distressed sales accounted for less than 1 in 10 homes sold

• BUYER DEMAND
  • Expected to remain strong due to low interest rates and an improving job market
  • The almost non-existent inventory of less expensive homes has created pent-up buyer demand
  • The high cost of renting will convert renters to buyers.
  • Bank owned sales and short sales are almost non-existent as home prices have risen
  • Institutional investors are effectively out of the market as distressed sales have diminished
• SELLER SUPPLY
  • Inventory of homes for sale will increase with higher home prices
  • Home price appreciation is expected to slow, in the range of 1-3%, as inventories return
  • Sellers who have been underwater are now in an equity position and listing their homes for sale
  • Home builders are building, helping to meet a larger portion of buyer demand
  • What will happen to rates going forward into 2015?  Difficult to say, but when they do rise, the inventory of homes for sale will increase and home affordability will decrease.  The Mortgage Bankers Association predicts rates will hit 4.7% by the end of the year.

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