The market is trending towards a more balanced market than we’ve seen in a couple of years. The seasonal swings in sales volume are more pronounced than last year. July’s sales volume was significantly lower in 2016 versus 2015. In the chart below you will see that inventory has generally increased from this time last year as well as the exact amount of change in sales volume versus July of last year. Some of the drop in sales volume is from lack of inventory in the multi-family market. Another factor is price appreciation in the entry level price point. Over pricing has also had an impact. More homes would have sold this year had they been priced more in line with the market. As I shared in the video update, this year I’ve seen a very, very high level of price reductions.
Quick Year to Date Statistics
Adams County currently has 10% fewer homes on the market than this time last year, however sales volume in July was down over 18% versus July 2015.
Arapahoe County currently has 8% more homes on the market than this time last year, however sales volume in July was down over almost 23% versus July 2015.
Denver County also has a higher inventory of homes on the market than this time last year, up 4.5%. Sales volume in July was down over 16.6% versus July 2015.
Douglas County’s inventory of homes on the market is up 13.3% from this time last year. Sales volume in July was down over 23% versus July 2015.
Elbert County currently has a 90-day supply of homes and sales volume is up 1% over this time last year.
Jefferson County’s supply of homes is pretty much equal to last year’s at this time, however sales volume is down 18.5% versus this time last year.
I think the level of inventory is still low enough to cause this market to favor sellers more than buyers in every price point. That being said, I think at least until spring, buyers’ s purchasing power is higher now that it has been in the last couple of years. It is another opportunity for buyers to take advantage of this incredible low interest rate environment. It is an especially good time for any of you who own a home in the sub $400K range to reaps the rewards of the appreciation you’ve gained and move up to another price point that hasn’t seen as much relatively speaking.
There is a good chance that we will see a trickle up effect from all the rental units coming on the market in the next 12 months. The Denver market is in the top 10 for the number of rental units coming on line. That could lead to a surplus of units which will lead to a drop in rental prices; making renting more affordable than purchasing. In turn that could curb some of the demand for entry level housing. It’s probably an 18 + month cycle but an interesting conversation when attempting to determine what the market will do in the next couple of years. There are already signs that commercial lenders are being more cautious in lending for apartment projects.
I do think the current political environment surrounding the presidential election is not doing anyone a favor when it comes to creating any kind of consumer or business confidence. I am hopeful that once the dust settles after November, we will see an upward bounce in confidence. That should lead to a typical busy spring season especially since we have a bit of a cushion in the interest rate market. Rates could go up a bit and still be where they were during much of the recovery.
Meantime, our market will continue to perform well, albeit a bit slower than 2015 and early 2016. August and September are really important indicators as to whether we were seeing a normal seasonal adjustment in July or if there the market is cooling off more than a marginal 5% or so in sales volume. If you remember, the spring and early summer last year were very wet and that led to a longer selling season, so I’m not totally shocked to see a one month drop off in sales. Especially considering we are now in the thick of a contentious election and the effect the high volume of incorrectly priced properties is having.