The Denver Real Estate Market: Is Inventory Really Depleted?
by Brian Burke
on Monday, May 13th, 2013 at 7:26am.
All over the country, a critical statistic has changed for housing markets. The average amount of time that a house spends on the market before achieving a sale is now less than 100 days. The public naturally reads real estate improvement into statistics like this. Nowhere is this change more evident than in the Denver area. However, the change is not necessarily a good thing for buyers.
What Has Happened to the Denver Real Estate Market?
Believe it or not, the median sale price of a home in Denver is now more than what it was in 2008. In fact, the median value of a sold home in 2008 was just $221,000 but the average price today is more than $250,000. It was just a few years ago that buyers were virtually dictating terms to sellers, who considered themselves lucky to make a sale. Now, the tables have turned.
This change has been underway for some time. When you compare January 2012 to January 2013, the most recent month saw a 9.2% growth. These represent the largest gains since 2006. Fewer than 7,000 houses were listed for sale in February. That is down more than 30% since one year ago and it is the lowest such figure in the housing market here since 1985.
Depleted Inventory: A Case of False Scarcity?
Most observers credit the suddenly depleted inventory for this change. However, everyone has his theory about how this low inventory came to be. It seems unlikely after the glut of houses that were on the market just a short time ago.
Foreign buyers are definitely one group that is partially responsible. There were far too many properties available in the last couple of years for the local populace to absorb them all. Even these foreign buyers, though, are running into trouble finding homes to buy now. Bidding wars between multiple buyers have already erupted over many homes this year.
The scarcity might not be completely real. Many people suspect that the banks are holding back properties or that the government is manipulating the situation so that houses come onto the market more slowly. It is also possible, of course, that the natural processes involved in foreclosures are creating a delay.
What This Means for Denver-Area Buyers
The big danger for buyers right now is paying too much for a home. Everyone knows from the last time around that there is no guarantee that property values will continue to rise. Instead, if there really are a lot of properties waiting to come onto the market, prices could drop again in the near future.
The best solution for buyers right now is professional help. In the previous state of the market, buyers were tempted to go it alone and skip paying a real estate agent. That could be a dangerous alternative now. More than any other time, home buyers may want to get some help navigating the chaotic waters of the Denver real estate market and avoid sinking too much into a property.
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Brian Burke | Broker | ePRO | Expert | 303.955.4220 Office | 303.710.2609 Direct | Brian@kennarealestate.com