State Of Denver Real Estate Market

STATE OF THE REAL ESTATE MARKET 

 

May Market Update

By: Gregory A. Pond

National

The confidence among U.S. home builders escalated in May to its highest level in five years.  According to a report from the National Association of Home Builders/Wells Fargo, builder confidence ascended to 29 in May, which is the highest level since May 2007.  This is still not a great reading, considering that any number below 50 is negative.  Although, homebuilders did report that sales and traffic were up.  Another promising sign is that builders requested the largest number of permits to build new homes and multi-families in 3 ½ years. 

According to a report from the U.S. Commerce Department, the number of new-home sales soared 9.9 percent in April, compared to last year.  The report noted, "new-home sales rose the most in the Midwest, by 28.2 percent in April, and by 27.5 percent in the West. The Northeast saw new-home sales rise by 7.7 percent in April, while the South posted a 10.6 percent decline last month."  The Commerce Department also noted that new-home prices were up almost 5 percent in April compared to last year-median price was $235,700.

  

The national new construction home inventory is historically low-landing at 5.1-months of supply, given the current pace of sales for new construction homes.  Given all the talk about shadow inventory and pending distressed sales, the current housing market could use the inventory to boost the number of homes on the market.  The common theme among home buyers and investors trolling the real estate market today is the challenge in finding a home that suits their needs.  This frustration has put home builders in a good position to capture market share.

  

Fannie Mae, the mortgage giant backed by the federal government, reported in early May that they would post a profit and would not need further tax payer support.  A sign that the financial condition of the consumer and homeowner are improving.  Fannie Mae stated that net income was $2.7 billion, a drastic change from their $6.5 billion dollar loss in the first quarter of 2011.  Freddie Mac also reported quarterly net income of $577 million for the first quarter.  

After speaking with several local Stapleton builders, the same increase in activity is taking place under the Stapleton Tower.  Many of the builders in Stapleton have sold out of Central Park West, and are writing contracts on new construction in Stapleton's newest neighborhood, Bluff Lake.  Bluff Lake is rapidly taking shape with the dirt quickly becoming alleys, roadways, and ditches for water pipes.  At the time of this report, Parkwood Homes already had four reservations for lots in Bluff Lake.  This is another positive indicator that the Stapleton market still has a strong demand.   

 

Denver 

  

The recent Case-Shiller report revealed that the Denver area housing market ranked number three (3) out of the twenty metropolitan cities that it monitors in the U.S.  According to the report, Denver experienced a 2.6 percent gain in March, compared to last year, which is the largest gain in nearly two years.  In contrast to the twenty metropolitan areas tracked by Case-Shiller that dropped 2.6 percent, only Phoenix at a 6.6 percent gain and Minneapolis at a 3.3 percent upturn. 

 The Denver housing market saw another good month in April.  Across the board, Denver showed improving housing metrics, with the number of home sold in April, inventory still historically low, homes under contract were up substantially, and the average price a home sold for continued to rise.  The exceptionally low inventory puts Denver housing inventory at a remarkable two to three months of supply of homes for sale. 

  

The number of homes put under contract catapulted in April, up 20 percent from April 2011 totaling 5,681.  The number of homes sold also propelled forward 14 percent compared to last year.  Another promising sign, the number of days a home was on the market before selling dropped by 20 percent compared to April 2011, according to Metrolist MLS.  The average sales price in Denver increased to $275,241, up 6 percent compared to March.  Below is a graph of the year-over-year change in Denver.

  

Mortgage Rates

Mortgage rates continue to hover and dip to new historic lows.  At the end of May, the national average for the 30-year fixed rate mortgage was at 3.94 percent.  Bankrate.com quoted rates for the 15-year fixed mortgage at 3.15 percent, while the 5/1 adjustable rate mortgage hovered at 3.01 percent.  The 30-year jumbo mortgage was at 4.54 percent-mortgages over $417,000.

Stapleton Home Sales

The Stapleton Denver real estate market is making a strong come back. In the table below, the data shows that sales started to pick up in April. According to the Metrolist MLS data, twenty-three (23) single-family homes and condos went under contract in Stapleton from May 1st through the 15th.  The average days on market (DOM) in mid-May was 39-days, compared to 122 days on market last year.  Below is the data for April sales.

April 2011-12 Home & Condo Sales
	2011	2012
# of Home & Condo Sales	26	39
Avg. Days On Market	145	58
Avg. Price Per Sq. Ft.	$182	$209
*Data gathered from Metrolist MLS.

Another positive note for mid-May data is that the average price per square foot (PPSF) climbed up from $188/sf in 2011 to $211 this year.  One negative, the number of sales declined this year from 12 transactions to 8 this year in mid-May.  But, the average price sold compared to the average original price moved in a very strong way from 92.56% to 99.07%.  This reveals that sellers are getting very close to their original asking price, which is obviously good news for homeowners that would like to sell in Stapleton.    

Considering that there are only twenty-seven (27) single-family homes on the market excluding new construction as of May 17, 2012, there is very little inventory for home buyers to choose from on the re-sale market in Stapleton.  Many of the builders in Stapleton are sold out of Central Park West and seeing a strong demand, because of the lack of re-sale homes on the market.  Many of these builders are now moving on to the Bluff Lake Neighborhood and some are taking deposits on lots in Stapleton's newest neighborhood.  To learn more about Bluff Lake Neighborhood, click here for the brochure.  

 

Lowry Housing Stats

Lowry Real Estate Sales Transactions for single-family & condos in April 2011 & 2012
	2011	2012
Sales	7	23
Days on Market (DOM)	131	96
Avg. PPSF	$149	$191
Avg. Price/Avg. Original	93.39%	96.76%
Avg. Price Sold	$257,071	$424,874
* Data gathered from Metrolist MLS.

Rental Market

According to a report by Trulia, rents continue to rise across the country.  The report showed Denver ranking number 7 on the top 10 list of metros with the largest rent increases.  The year-over-year increase in asking rent bounced 9.8 percent in Denver, Colorado Springs was number seven with a 10.2 percent increase.  A couple of the factors pushing rents higher are the declines in homeownership, tighter lending standards, and the tight job market.