Patience Begins to Pay Off, Denver Emerges as Real Estate Market Leaderlivxmin
INSIDER PERSPECTIVE FROM SOTHEBY’S REAL ESTATE EXPERT STEVE BLANK
It is appropriate and accurate to recognize the improving real estate markets across the country. Denver is considered a leader among emerging cities. Most of the metropolitan areas across the country have been stable this year and/or improving for six straight months. In fact, as of October all but five states have had year-over-year gains as reported by Corelogic. In great part, this is due to reduced inventories and higher buyer demand.
Many people that had contemplated moving over the past 5 years are getting off the fence, inquiring about financing, attending open houses, and have started to move forward. The housing recovery is clearly expected to continue expanding in 2013, but stay tuned to the “fiscal cliff” debacle as it relates to potential changes that could reduce the amount of mortgage interest deduction currently allowed. Two of the nations most respected housing price indexes reported significant 3rd quarter price advances. The S&P/Case-Shiller index recorded a 3.6% gain over the third quarter of 2011, while the Federal Housing Finance Agency (FHFA), seasonally adjusted housed prices rose 4% Q3 of 2011.
Lawrence Yun, Chief economist for the National Association of Realtors (NAR), announced that “the inventory of available existing homes is at the lowest level in seven years, while new construction inventory has hit a 50 year low.” That scenario will change, much like the new construction numbers in Denver are improving, the nation’s builders are exercising land options, pulling permits, and are starting to build again. Yun of NAR recently stated that although home construction is increasing, it is still only half of the historic average of annual housing starts. Distressed Sales (short sales, foreclosures, bank owned properties) will continue to be less of a market factor.
Two years ago distressed sales made up nearly 40% of all sales compared to about 25% this year. Some economic predictions suggest that the number should be under 20% for next year. Currently, RealtyTrac released their Q3 US Foreclosure & Short Sales report, showing foreclosure related sales accounted for 19% of all home sales. Georgia was the worst at 38% (down from 41% in Q2), with Tucson, Phoenix, and several California cities still experiencing higher numbers of distressed sales . However, the largest factor affecting the market may still be the low levels of available homes for sale.NAR reported, at the current sales rate, there is a 5.4 month supply of homes currently for sale, down from a 7.6 month supply in October 2011. Denver is closer to a 4 month (or less) supply, with a 30% decrease in listings available, which is down from a 41% number in November 2011.
Although housing affordability is currently as an excellent level, remember that with rising values, demand increasing, and interest rates so low they have to go up; this markets so called “perfect storm” to be buying, will be changing like the weather at some point. If you are a potential seller, our low inventory should help you achieve a good sale price, allowing you to enter the market as a buyer, making a good economic and desired move. Please feel comfortable in writing or calling me if you would like to talk real estate.