I received a great question on my last article here at All Denver Real Estate Blog. Kristen asked what signs I see, as a statistician, that the Denver real estate market is improving for Denver in-fill markets. For the purposes of her question, fills are generally new homes in older neighborhoods.
Kristen wrote: I was curious if you’ve noticed any difference in the inventory in infill markets in Denver. The inventory in my neighborhood alone hasn’t approached these levels since 6+ yrs ago, and I’m having a hard time finding things to show my clients. It also appears that the u/c are substantially more ‘evenly proportioned’ throughout price ranges. A year and a half ago, it was disturbing to see a grouping of U/C’s at the lower price ranges and none at the top. Have you noticed a similar trend?
I have to answer this question with a graph as I often do. So, please forgive the statistician’s background, but here is my analysis. It begins with MOI (months of inventory)
I have seen the same trend as you pointed out. Take a look below. This is the MOI (months of inventory) by size of home (or its price point… same idea). Start on the left. In January 2010, we had almost no inventory (0.8 months) for small, cheap homes. And they were appreciating fast. At the lower left, the largest 10% of the homes ($460K+) had lots of inventory (20 months) and were declining in price.
Flash forward a year (and look on the right side)
The smallest 10% of the homes (under 910 sq ft) has 4.9 months of inventory… six months is a balanced market, so that is pretty close. And appreciation cooled off a lot, down to 6% in the last year. If you look on the lower right, the biggest 10% of homes (2875+ sq ft) have declined from 20 MOI to 8.2… much closer to balanced… and their price appreciation has improved a lot too.
Looks like a much more balanced market.