As the Broker/Owner of Your Castle Real Estate, I’ve decided to publicly share the encouraging results of January showings on this All Denver Real Estate Blog. Here is the memo, verbatim, that I sent to my associates this week. Granted: January home sales were poor but the sales outlook for the Spring Selling Season is excellent:
Please find attached, a one page summary of showing trends from January 2009 to January 2011. This is a great update tool for your current listings as well as for listings presentations to properly set expectations. Since buyer traffic is picking up, it can also be used as a tool for buyers to encourage them start seriously looking now, before the buying season heats up (and prices follow).
This is the best overall leading indicator for where the market is going. Note that Nov ’10 and Dec ’10 had the terrible activity. It’s not a surprise that our metro-wide sales volume in Denver in Dec ’10 and Jan ’11 was anemic. It’s hard to sell a house if you are not showing it. Happily, there were 6.8 showings per active listing in January ’11 (vs. 4.4 in Dec ’10). That’s a 50%+ improvement. January ’10 had 7.0 showings per listing, so we are about on par with last year. For historical perspective, Jan ’09 was 7.5.
Another key point to notice. The second round of tax credits ended on 4/30/10. Note that the number of showings per listing fell from 10.2 (April ’10) to 5.4 (May ’10). January 2011’s showing traffic is the best we have seen since the expiration of the tax credits. This is a good leading indicator that sales volume in the spring should start to pick up. It will not be as robust as spring ’10 since we don’t have the tax credit, however.
Your Castle RE had 201 active listings at the end of Jan ’11. This is down a little from Jan ’10, when we had 222 active home listings. Jan ’11 was up from 178 in Dec ’10. This is a normal seasonal pattern. Sellers tend to pull their homes off the market over the holidays, then re-list in January. Inventory normally will build until it peaks, traditionally in June or July.
During the tax credit last spring, we saw extremely high activity in the lower price ranges as first time buyers rushed to take advantage of the government stimulus. The higher end homes, reflecting a lack of consumer confidence this time last year, languished and had few showings. There has been a significant change since this time last year. The lack of tax credit in Jan ’11 decreased demand by first time buyers for less expensive homes. And increasing consumer confidence has brought trade-up buyers back into the market. As a result, showing activity is essentially the same across all price categories. There is a modest bias to more expensive homes getting slightly more showings per month.
Messages for clients
- Owner occupant buyers: Showing traffic indicates that we are past the bottom, and this should point to modestly increasing prices by summer. Interest rates have also been on a clear, steady, upward climb for months. Buyers considering a purchase might be well advised to buy sooner than later.
- Investor buyers: The $50-$100K segment has the least amount of showing activity… for now… inexpensive rentals will likely get more competitive as the summer sales season kicks in and first time buyers get their tax refund checks.
- Seller prospects: There is a good selection of inventory to trade up into (see buyers, above). Listing now vs. later this spring will give them an advantage over their competition. While there are not as many buyers in the early spring season, they tend to be more serious (no one looks at homes for fun when it’s 15 degrees out… they are motivated by something).
- Active sellers: While showing traffic for the industry has improved, it’s not as if we’re seeing the incredible showing traffic of tax-credit season. Every showing counts. While it’s often inconvenient to pick up the home and make it “parade ready” on short notice, it’s important to make the effort.
Please let me know if you have any questions.