By Larry Hotz, All Denver Real Estate
July homes sales in the Denver metro area remained essentially even with the year ago period. 5878 single-family homes and condominiums were placed under sales contract during the month and 5123 homes closed.
But, the best news for the Denver real estate market was that inventories of existing homes and condos dropped by more than 15% from a year ago July. For a variety of reasons fewer homes are on the market this year than last and sales remained essentially the same.
In June, inventories of existing homes and condos on the market were 13% lower than a year ago period. So, the supply of homes continues to decrease even more. That is good news for potential home sellers who face slightly less competition. So why are there fewer homes on the market now?
One reason is that the level of foreclosed homes seems to be leveling off. Local housing officials have officially predicted that 2008 will be the height of home foreclosures and that they will begin declining in 2009. Another reason is that some home sellers are just giving up. They are generally people who don’t have to move and are discretionary home sellers. If the price the market is willing to offer doesn’t match their expectations, they can simply take the whole law for market and wait for a sunnier day. Finally, corporate relocations out of the Denver metropolitan area have slowed down in 2008. It seems fewer corporations are willing to transfer key employees and pay for their relocations.
My office at the Kentwood Company is one of the few real estate offices in the Metro Denver area that continues to have weekly sales meetings. Today, we discussed the state of the real estate market and several of my colleagues had interesting observations. The most significant observation to me was that many listing agents of homes priced over $2 million have seen a dramatic decrease in the number of showings. Even homes priced over $1 million are receiving many fewer showings. That, of course, does not bode well for August sales of these higher prices homes.
Therefore, I suspect we will see that the average selling price in Denver will decline in August. In July, the average selling price was down 12% from the year ago period. Watch for that number to increase when August sales are reported. Some reporters will infer that this means that the average price of all single-family home in Denver is declining. And that’s not necessarily true. What I am seeing is that the mix of higher prices homes is declining while middle and lower prices homes are still selling very well.
For example, we wrote an offer on behalf of a client on a new listing in the Washington Park area last Friday. The home and only been on the market one day. Over the weekend it received two more offers and sold well over full price. The home is priced in the $300,000 range and attracted a lot of buyer interest.
That is not happening with luxury priced homes over $1 million. Inventories are increasing and sales are slowing. Don’t be surprised to see the media portray this as an alarming decrease in the average sales price of Denver homes. It’s not. It’s just a slowing of the sales of luxury homes.