May Home Sales

    By Larry Hotz, All Denver Real Estate

    Well,  there’s good news and bad news for the Denver real estate market in the latest MLS statistics released for the month of May.

The best news is that the number of single-family homes and condominiums actually decreased almost 10% from the year ago period.  That means that the supply of homes is shrinking to match lower home sales.

    The bad news is that actual closed sales were down about 8% from May 2007.  Although reported under-contract sales were essentially the same as the year ago period, the number of reported sales which failed to close increased to a whopping 25%.

Under contract sales generally fail to close due to home inspections or home loans that are not satisfactory to the buyer.

    The standard real estate sales contract issued by the Colorado real estate commission changed at the beginning of this year.  Prior to that time, buyers could only escape from the contract if they could prove that the loan described in the contract had been rejected by a lender.  The new language gives the buyer sole discretion to approve the loan terms up until the loan conditions deadline.  That means a buyer can simply say that the loan terms are not satisfactory.  This clause gives buyers unparalleled power to terminate a contract…sometimes just a few days before closing.

    There is no question that the new, pro-consumer sales contract works against the best interests of sellers.  This could partially account for the huge increase in failed sales contracts this year.  Home inspections are another item which can cause the termination of the contract.  Buyers have the option of terminating a contract or asking the seller to make any repairs the buyer asks for.  But, sometimes sellers do not have any additional funds to pay for those repairs and the sales contract can be terminated.

    The average price for homes and condominiums that sold during the month of May decreased by 11% from the year ago period.  But that doesn’t mean that home values depreciated by that amount. Homes sales by price categories was not released by Metrolist. But, we have noticed at the Kentwood Company that there are now more homes sales below $300,000 and far less sales above $1 million.  As a result, the average sales price is being decreased by the higher mix of lower-priced sales. 

    Home sales above $1 million are slower throughout the market somewhat slower even in the most desirable neighborhoods such as Cherry Hills and Greenwood Village.  Home sales above $3 million are dramatically slower in all neighborhoods.  Surprisingly, prices for homes that do sell even in these luxury home price categories have been relatively stable in Cherry Hills, sections of Denver and Greenwood Village.  It’s just that fewer luxury homes are selling and the ones that do sell take more time on the market.

    Also, more homes are selling below $300,000 which contributes to the average lower home price statistic.  Elizabeth has been working with many first-time homebuyers this year looking in that  price category.  Of course, that is the price point which most first-time homebuyers desire. This is a great time for first-time home buyers. Prices are soft. Interest rates and low. And, selection is plentiful.

    "My friends and clients are finding the deals", Elizabeth says. " They are thrilled that they can afford to finally buy a first home. I have been very busy since February." 

June 6, 2008 | Filed Under Denver Real Estate News, Kentwood Company 

Comments

One Response to “May Home Sales”

  1. Colorado Springs on July 3rd, 2008 7:17 pm

    Great stats to see. The news should bring up the positive market changes to help expedite the improvement of the market.

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Copyright 2007-2008 by Loren S. Hotz. All Denver Real Estate.