There are some changes happening in the Denver market! REColorado (local MLS), released numbers for October 2018.
I annotated (red box) of month-over-month market updates from Oct 2017 to Oct 2018. Active listings in October are up 34.6% in Oct 2018 over Oct 2017. That's a 34.6% increase!
Properties under contract are down 13.2% (6,062 to 5,263).
I can't remember the last time I've seen month-over-month changes like that. I've read my fair share of articles claiming that "The Denver market is turning."
Is it? I have no idea. But, real estate markets don't turn on a dime. It's important to put have a bigger picture context.
Big Picture Context
The below image has a lot going on! Give it a look over and then read below for an analysis.
There isn’t a relationship between inventory level and population. The number of homes active on the market in 2016-18, relative to the population, was at the lowest level ever. The inventory is less than a third of the historical long-term average. The recent inventory build is a welcome relief for buyers.
My big takeaway from the data, is that we've been accustomed to the hot seller's market the last few years. Now that the inventory has increased, people are freaking out. Mainly it is sellers adjusting their expectations!
The current inventory is still well below overall average for an estimated balanced market (~16,000 homes). In October we were at 8,500 homes. That's still about half of a balanced market! Now, going from 6,300 to 8,500 homes doesn't look at that drastic. We are still in a seller's market.
The 1990's seller's market had 5 homes / per 1,000 people. Our current seller's market has 1.5 homes / per 1,000 people.
Showings Are Way Down
Your Castle Real Estate tracks how many showings each active listing receives. It went dropped from August to September to below 2012 recession levels! it's interesting to see that there is a lot more activity in the past summer than in previous years.
Comparing the Last Denver Bubble to Today
The table below is a great snapshot of recent data to bubble data.
|Homes for Sale at EOY (End of Year)||5 year average of 22,258||5 year average of 5,726|
|Average Months of Inventory||6.1 months||1.8 months|
|New Homes Built||Total of all 5 years 93,000||Total of all 5 years 30,000|
|Cumulate Job Growth||85,892||180,708|
|Net Migration to Denver||24,000||190,000|
|Homes Built : Migration||3.9 homes / 1 person||0.2 homes / 1 person|
|Result||Bubble + correction due to too much inventory and loose lending||Scarce inventory drives price increases|
It's a great reminder that we have a lot catching up to do for overall inventory. Bottom line is that inventory has not kept with demand.
I have no crystal ball and can't predict the market, but here are my thoughts:
- Years of pent-up demand is not disappearing over one quarter. It's still a seller's market.
- Sellers have to adjust their expectations.
- Listing agents will need to put more effort into marketing the property. (Most of our clients are buying, so I'm hoping more listing agents will actually return phone calls!)
- If you're a buyer, get on it before January comes around!