2015 Wrap Up & 2016 Projections

February 23rd, 2016

2015 was a great year to be a seller and a tough year to be a buyer. Let’s look at the sales stats from Denver Metro and Boulder County

A tale of 2 cities:
Denver Metro – While 2015 showed a slight increase in new listings, pending sales, and sold listings over 2014, the two years were very similar everywhere but pricing. Denver’s appreciation led the nation among major metros at over 11%. 3 years of rapidly dropping inventory and huge demand not only has homes selling for more, they’re also selling 26% faster than in 2014.

Boulder County – Boulder tracks residential real estate numbers a bit differently, separating data for single-family homes and attached homes. Single family stats showed around a 2% drop in inventory with an almost 9% increase in sales! And while attached home inventory dropped by almost 8%, sales were down under 2%. In 2015, single-family and attached homes sold 10% & 20% faster and at 9% & 15% higher average prices, respectively.

Where did we come from?
The National Association of Realtors defines a Buyer’s market as a market in which there is over 6 months of inventory. A Seller’s Market is one with less than 6 months of inventory. Currently, between Denver & Boulder, we have around one month’s inventory.

In 2013 our real estate market crossed over from the most extreme buyer’s market in history (2008) into what is now the most sellers market we’ve ever seen. And that’s where we remain today: at the top of the curve in a strong Seller’s market across the board.

What does it all mean?
Clearly, low inventory & high demand defined 2015 & will likely define 2016 as well. And while most sellers are ecstatic about this historically-low inventory, they’re not excited to enter this same market as a buyer. The result – if someone doesn’t really have a great reason to move, they likely won’t. Therefore, there’s no sign of an upswing in inventory for resale homes.

New builds aren’t really keeping up, either. The 19,000 new homes built in 2015 aren’t enough to house the net migration of over 100,000 people who moved to the Centennial State in 2015 (assuming 65% are to the Front Range).

“Migration to Denver and Colorado remains strong. People are moving here out of choice and not necessity at a rate nearly double what the national average is. This market is fueled by wealth and not credit”
-Elliott Eisenberg, National Economist

Let’s face it. Colorado is a great place to live, and everyone knows it.

Where are we going?
Similar to weather forecasting, we review past years with similar conditions. Unfortunately, there’s never been a seller’s market like this one, and yet, one can extrapolate that 2016 will be like last year, only more aggressive.

Speed – As agents and buyers have become accustomed to seeing homes and submitting offers within 24 hours of the listings hitting the market, the new normal is writing offers the DAY homes list.
Strong appreciation – Even when buyers often have to pay above the current appraised value, when our markets are appreciating between 10-12% per year, they’ll build equity very quickly.

Is it sustainable?
Bubbles are usually revealed by 2 things: oversupply of homes and rapidly increasing sales. Our inventory is still declining, and our sold listings are only up by 9%. Generally, a housing bubble would show much higher year over year sold listings. Plus, the number of homes that have expired and failed to sell have flat lined, as have distressed sales. Our market is like the reverse of a bubble – no supply and steadily increasing prices.

The bottom line:
In Boulder, almost half of all homes on the market were already under contract as of the beginning of January, and Denver is looking pretty similar. While the market usually starts to pop in March, we’re already seeing multiple offers on our listings and competition for our buyers.

Whereas, the increase in home prices and interest rates may cause a bit of a plateau this year, 2016 is already starting off even stronger than 2015.

NOVEMBER 2015 MARKET UPDATE

December 28th, 2015

As predicted, for the first time since the financial crisis of ‘08, the Feds raised the short-term interest rate by around .25%, and announced that it would be raising the rate by around 1% per year for the next 3 years. And whereas it’s expected that mortgage interest rates will remain low for the foreseeable future, we saw a jump of between .25% and .5% in 30-yr fixed mortgages overnight after the announcement. Surely 6% is considered very low interest for a 30-year fixed mortgage, but when compared to the near 3.5% rates buyers have enjoyed for the past several years, will home-buyers experience sticker shock?

I’ve already seen some of my Buyers knocked down a price bracket. And when prices are still climbing, that’s the wrong direction. Based on a Buyers Debt-to-Income ratio, if a mortgage is going to cost more in interest, the payments will be higher. If the payments cause that Buyer’s monthly Debt to jump in comparison to their Income (above Fannie or Freddie’s acceptable ranges), Buyers are forced to buy a home with a lower purchase price. As rates increase, your buying power will decrease.

If you’re a Seller, there will be fewer Buyers in your price range. A lessening demand in higher price ranges eventually slows down the market. We’ll see fewer multiple offer scenarios, more days on market, and ultimately, lower sale prices.

Boulder Market Update:

Inventory is way down and  will continue to drop greatly. Listings may be up 4.3% for SFH, but Pendings are up almost 25%. Solds are down half as much as Inventory (i.e., SFH Solds were -16.6% as compared to Inventory’s -31.8%), so that’s another indication of tightening inventory. Median price is up by 10% across the board, and things are still selling at or above asking price. Depending on the price range, homes are selling faster than they did last year.

Bottom line? With Google inbound and plenty of businesses in need of new manpower, demand continues to rise for the Boulder market. With supply dropping, prices – for sale and rentals – will continue to rise. If you qualify, it’s a better deal to buy vs. rent in this market.

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Denver Market Update:

Inventory and Listings are up across the board. While SFH Pendings are up a few percentage points more than the rise in Listings (14% vs. 11%), the ATD Pendings are 10% vs. Listings 26%. This 16% difference points to the Denver condo market softening in values. Overall, Solds are down 16.2% and Prices up 14%. Now that the interest rates have increased, and the Inventory is growing, there should be a flattening in demand.

Bottom line? Supply is up, and demand is showing signs of dropping. Sell now, before the demand lessens. And if you’re looking to buy, it’s already gotten MUCH easier than it was just 6 months ago.

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OCTOBER 2015 MARKET UPDATE

November 17th, 2015

From Boulder to Denver and (almost) everywhere in between, the numbers are very consistent in showing pent-up demand for homes in a market limited by inventory. Great for sellers; not so great for buyers. There are a few tricks to buying a home in this market and not overpaying. Just know that I can walk you through those tricks of my trade.

Single Family Homes – October 2015 compared to October 2014 (see more in-depth stats for Denver Metro below)

                                         Boulder County    Denver Metro
Inventory:                 -29.6%                   +10%
Days on Market:   -15.8%                   -30%

Boulder: Inventory across all home types is down nearly one third, and with the new listings looking pretty stable compared to last year, the inventory will stay pretty low. The big indicators continue to be the prices at listing and sale and Days on Market. Homes are selling for nearly 20% more than they did a year ago at a higher list price, in record speed.

Denver: Inventory has bounced back from earlier this year. We’re actually up 10% in listing inventory for single-family homes and 2.2% for condos & townhomes compared to this time last year. Denver Metro might be finding some balance, but it’s still a strong seller’s market. Inventory is active for only one month, for all home types and price ranges. Average prices are on the upswing, and the time on market is significantly decreasing.

Very important: Interest rate hikes are expected before year end. The Federal Reserve Bank has skipped two opportunities to raise rates this fall, but the final meeting in December will likely include a minor rate hike. Based on this expectation, housing activity should stay steady through the holiday months. There are many encouraging notes about the current market, and buyers/sellers should complete transactions before 2016.

So if you are selling, I’ll get you the absolute most a buyer will pay in one weekend – all the way through closing. Over the last two years, my sellers receive 104% of their asking price and 10 offers on average. Call me anytime at The Galvis Group office in Louisville 720-441-4815.

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August 2015 Market Update Decoded

September 18th, 2015

Each month, we offer a snapshot of the real estate markets in the Denver Metro and the Boulder areas, focusing specifically on a few stats that help paint an overall picture of what our market is currently doing. If charts aren’t for you, don’t worry. Below you’ll find a quick explanation of the market and, more importantly, what it means for sellers and buyers.

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Denver Metro Area Analysis

With active inventory down just 2% from this time last year in the Denver Metro, and sales just up by 4% over this time last year, the real estate market in the metro area is settling down a considerable bit from the insanity of this spring.  With that being said, there is still less than 2 months of available inventory, so it’s still a very strong Seller’s market. The two biggest changes in the Denver Housing market compared to August 2014 are in Days on Market (DOM) and the Average Sale Price ($AVG). DOM is down 37% to just 19 days on market until sale, and the average price has jumped up 11% over the past 12 months. The bottom line? While we may not still be getting 20-40 offers up to 15% above asking price on every new listing that hits the market within the first weekend, we are still selling every listing very quickly and for great prices, usually with multiple offers.

Boulder County Analysis

With that said, the Boulder County market is still a bit insane. Inventory this August was down a whopping 26% while the number of sales is up 11%, and DOM is down almost 20% – Read: there’s already nothing for sale, but what’s out there is selling way faster than it did at this time last year, and there are more sales to boot. It’s an awesome time to sell a house in Boulder. Buying one, on the other hand, requires some serious skill, hard work … and a touch of luck.

What’s really interesting is that the $AVG is only up 6%. When compared to Denver’s 11% increase, that may sound meager, but Boulder County’s average price is already just South of $600K, compared to the Denver Metro, which just this year broke $400K.

If you would like more information about the market or would like to speak with an agent about the market, just give our office a call at (720) 441-4815.