Denver Real Estate Market Sales Dropping
Although national statistics show that pending home sales for October, 2015 moved up slightly by 0.2%. However, the housing market in the Metro Denver area had the worst October to November decline since the housing decline of 2008. RE Colorado, which carries the region’s multiple listing service for Denver, reported a 27 percent drop in closings during this time. An even larger decline of 29.4 percent was reported by The Denver Metro Association of Realtors (DMAR). Denver is ranked as among 14 metropolitan areas that are “overvalued” as measured by the ability of consumer’s incomes being able to support home prices, by a recent CoreLogic report.
Drop is Going Beyond Seasonal Change
Typically, around the country, residential real estate markets slowdown in September. However, the recent slowdown in Denver seems to have gone further than most would expect. In September DMAR reported that 4,960 houses and condos sold over 11 counties. This is an 8% drop from August. The median home price was down by 1.65% during this time. Houses on the market are seeing multiple drops in prices, especially for those in the $500,000 to $600,000 price range. During the month of October, over 1000 properties in Denver had to lower their prices do to, lack of demand.
The Denver housing market is showing that more homes are being listed for sale than over the most recent period. That is an indication that the home buying frenzy in Denver is likely peeking out at this point. Home owners want to quickly try to lock in the gains they have realized over the past several years. This could cause prices on homes to begin dropping even more.
With a larger inventory of homes for sale, this could turn the Denver market into a “buyers’ market.” Recently the Federal Reserve increased short term interest rates by 0.25 percent. Although, this was expected by most people, it could begin to have more of a downturn on the real estate market. Home buyers will have to make higher monthly payments, causing some to put off making new home purchases. Sellers of real estate may need to lower their list prices even further to attract buying activity because of these increases.
Should You Wait to Buy in Denver?
Most experts think so. They feel that housing prices in the region are going to fall further in coming months. This is due to the rapid run up in prices over the past few years. Denver has been one of the hottest real estate markets in the country. What goes up, must come down. It may be time to take profits rather than buy in. Many are beginning to wonder if the Denver housing market has changed for the longer term. Only time will tell.
Sellers in the Denver market seem to be on the rise. Could it be that they are concerned that prices have moved too high? Recent trends seem to be indicating that this is the case. Obviously, in the fall and winter months, real estate sales slowdown everywhere. However, the slowdown this time around in Denver, is larger than most other times, except for 2008, and remember what happened then.
How Low Will Prices Go?
No one really knows how low prices will go in the Denver real estate market, however, the interest rate increasing cycle has started. It typically does not end after the first quarter point increase. If there are further increases, real estate prices are likely to go lower, until the cycle completes itself, especially in markets that have been as “overheated” as the Denver market has been.