May 2009 Home Sales

By Lon Welsh, Real Estate Broker and Statistician

Throughout the entire Denver metro area, May 2009 sales results for detached, single-family homes (DSF) were very similar to the trends we have seen all year.

Price highlights:

• - The average sales price increased from April to May, as it usually does
• - The average price is down 8% in 2009 vs. first five months of 2008
• - The 2008 vs. 2009 price gap was very high in January and February; it has been smaller in the last three months. This is probably an indicator that pricing is starting to firm up
• - The largest 10% of the homes (those with more than 2875 square feet) saw prices drop 17% in the Jan-May 2009 vs. Jan-May 2008. The smallest 10% of homes (those under 910 sq ft) only dropped 2% in that time period. Still, larger home prices dropping less than they have recently.

Denver area home prices by size. Volume highlights:

- No real change from last report; the number of unit sales is off 21% in 2009

- Unit volume declines have been consistent in all size categories.

- Overall, distress sales volume (REO + short sale) in May 2009 matched May 2007 volume levels; down about 25% from May 2008 units sold.

- REO (Real Estate Owned by lenders = foreclosures) sales have declined to 2007 levels. This is a dramatic drop from 2008. For example, May 2009 had about 700 REO (DSF) sales vs. over 1200 in May 2008.- The gap between 2008 and 2009 is growing each month

- Short sale volume has grown +50% in unit volume, but this gain is on a low number. It’s nowhere close to enough growth to make up for the REO volume loss.Number of Denver home sales are increasing in April and May.

It’s unclear if there will be a big surge in REO activity later this year or not.  If you maintain the current pace as a baseline, and if REO then doubled in 3Q 2009, it’d be just a little more volume than we saw in 2008.

Distressed sales including short sales and foreclosures dominate regular home sellers.

On the good news side, consumer confidence has been firming up and the rate of decline in job loss and several other indicators has improved in the last few months… generally following economic expectations.  This should set the foundation for a recovery in the owner occupant market in 2010, as we have been discussing. In fact, these graphs show signs of that recovery. Notice that larger home sales are selling better in May than they have in 7 months. This is part of “trickle-up” caused by better sales of smaller, low-priced homes.  There is anectedotal evidence that the lowest priced homes are actually experiencing price appreciation with multiple offer.It seems that investors and first-time home buyers are have escalated demand.