Megan Aller, statistician with First American Title, explains that the recent slow-down of Denver home sales is not indicating a “bubble” that is about to burst. Instead, Megan sees seasonal fluctuations in line with previous years. In addition, those fluctuations create opportunities for buyers.
Megan analyzes 15 different variable statistics in the Denver real estate market from our Denver Multiple Listing Service, reColorado. Some of those turned negative this summer. Those include the number of home sales and the increase of available homes for sale. But, other factors such as average days on the market and price stability held in the expected range for seasonal fluctuations.
For example, inventory of existing single family homes saw typical gains going into July with an increase month-over-month of 13.6% bringing total detached single family units to 5,890 units for sale. Also, the number of average days that a typical single family home on market increased to 23 average days before going under contract for sale. However the median days to contract stayed extremely low at only 10 days. Both metrics continue to report at a similar pace as previous years in this cycle. (2013-2018)
Denver Home Prices Peaked in June
Megan explained to me that home prices usually peak annually in either May or June. This year the peak was slightly earlier in May and prices began to pull back starting in June. Prices continued to decline in July. The average sold price reported $540,472 which is a decline by -0.6% from the previous month. However average home prices remain positive by 3.9% year 0ver year. And, median sold prices showed an interesting spark of activity MOM from June at $464,950 up 1.1%.
Closed to list price ratios remained steady in July at 99.5%. That hardly suggests a bursting real estate bubble in the Denver market. Even the “Original to Sold” price ratio dropped only to 98.2%. However, Megan says that both metrics are likely to decline through the end of the year giving buyers more negotiating power in the back half of 2019.
Flash sales, or homes placed under contract in the first weekend of marketing, slowed in July. The number of units under contract in 7 days or less was 43.2%. Still, almost half of all new listings are still selling within the first week. And finally, 57.6% of homes closed in July sold for at or over their asking price! There still is not much negotiating price in our traditionally slower summer market.
Goldilocks Opportunity for Home Buyers
Still, prices have declined slightly and may continue to do so for the rest of the year. But, there is more icing on the cake. Interest rates on fixed mortgages have dropped. That causes much lower payments for monthly mortgages. Consider that mortgage interest rates were rising at this time last year. In fact, rates were nealy a whole percentage point higher by Labor Day. Now, rates are declining.
So, lower interest rates and slightly lower prices create this golden opportunity for home buyers in the Denver real estate market.
Interested in following Megan Aller and her world of Denver real estate statistics? Check out her YouTube Channel and her clever “A Girl and Her Graphs” on Facebook. These are great insights into our ever changing Denver real estate market.