Progress IS Progress – Insider Perspective from Sotheby’s Real Estate Expert Steve Blanklivxmin
The real estate market has demonstrated consistent improvement in most every visible category. Denver is one of the emerging metropolitan areas nationally, leading the country into relatively greener pastures. Aside from normal economic factors like improved unemployment figures, very low interest rates, lower but rebounding prices, and higher consumer prices, there are other reasons that can (and will continue to) explain this positive direction.
New home construction sales illustrate similar elements correlating to what we have experienced in the existing home market. For example, new home sales fell 80% from July 2005 to February 2011. Up until recently, most homebuilders were happy to just survive the last 5-7 years. 2012 will be the first year since 2005, that new home sales climbed higher than the prior year. The anticipated figures for the year are 360,000 new home sales which is almost 20% higher than the 305,000 built in 2011. Of course there were nearly 1.2 million new homes built in 2005, and apparently that was a strong indication of some serious overbuilding. Financial institutions are beginning to show us some light at the end of the tunnel for builders and developers. Wells Fargo recently unveiled a new division focusing on lending to mid-sized and regional builders.
Let’s turn our attention to another very important demographic in our market that has the potential to make a significant impact. That would be our seniors (65 and older) not to even (barely) mention all the empty nesters (late 40s to early 60s) that are looking to make a lifestyle change. Most seniors have large equity in their homes and have the highest level of home ownership among all age groups. Most of them, upon selling their current homes, will buy something of equal or lesser value and will likely pay cash. In fact, nearly 5 million seniors (15% of the demographic) will sell and buy over the next three years. They have the ability to make a positive impact on the market because of their sheer numbers and capacity to buy with cash. Seniors may not be making most of today’s headlines and may not be creating the new trends in social media, however:
– 68% of seniors own their homes free and clear
– 94% of those surveyed, who buy, will pay cash
– These seniors will likely create 8 – 10 million buy and sell transactions through 2015.
Nationally the median home price (existing home sales) recorded its 7th back-to-back monthly price increase. In addition NAR (National Association of Realtors) reported the number of existing homes sales was 11% higher than September 2011. And listed inventory is 20% below where it was nationwide in September 2011. For comparison sake, Denver real estate has been ranging between 31% and 42% less inventory each month over the prior years available inventory.
Locally we have a very good story to tell. The number of sales were at the same level as a year ago, however the average price of the sold properties went up a remarkable 28% with the average sold price per square foot rising an impressive 17%. Keep in mind, with approximately a third less available inventory to sell, these sales figures reflect a healthy view of the economic definition for the Laws of Supply and Demand. And although the average % of sold price to original list price shows a 3% difference, that is really almost a 40% improvement.
We all appreciate reading and hearing good news. It is how we use the information that can make a big difference in our lives. Please feel comfortable writing or calling me if you like to talk real estate.