The number of homes on the market in 2008 compared to previous years has declined every month since last January.
That doesn't mean there aren't many folks sitting on their homes waiting for the market to improve. In fact, more often than not these days I tell people, "if you don't have to sell, don't."
How long will we have to wait for the market to start going up? No one really knows for sure, but when we look at the statistics it starts to look like the answer shall be "soon!"
Our days on market is decreasing.
We are seeing multiple offers on homes prices well under the $200,000 range. In fact many REO (bank owned) properties are now selling in a short amount of time. Bidding wars are not uncommon.
Many would be investors are surprised to learn there isn't room a chance to negotiate ...down. With multiple bids on a property, the price actually goes up.
Of course that is a pricing strategy called The Auction Effect. The auction effect kicks in when the property is priced so well and there are several buyers who want it. They all put in an offer, usually at the onset of the property going on the market.
As most Realtors will confirm, the first few weeks a property goes on the market are crucial. It is during this time the pent up demand for new listings manifests itself. Sometimes homeowners think when they get a bid on the home right away they feel it was priced too low. That could be the case, but more often than not the push comes from the people who have been in the market and not found what they want!
In my experience, this crowd is often the buyers who have missed out on multiply properties and are now learning they must 1) act quickly 2) pay the price 3) come in with a strong offer. They are the wounded and damaged would be buyers who have missed out because they weren't in step with what is happening in the market.
Does this make sense? If not, talk to someone who has written offer after to offer only to end up the bridesmaid and not the bride!
Number of Combined Homes Sold in Denver for 2008
This graph demonstrates the combined (single family detached and attached) sales on a monthly basis for the past 3 years.
November 2008 saw home sales tank. This was the month financing around the country dried up. Someone by the name of Paulson pushed the big PAUSE button in the economic sky. Pause we did!
By December things started to pick up again. Note how overall we sold as many homes in December of 2008 as we did in 2007.
Denver Real Estate Market Absorption Rate for 2008
This one is a tricky one if you don't have your thinking cap on. Absorption rates are like golf not bowling scores. The lower the number the better it is.
Think Golf here folks!
After March 2008 the absorption rate has been less than it was the prior two years. This in part relates to the lack of inventory. Homeowners sitting on the home rather than putting it on the market.
Whatever the reason(s) seeing the absorption rate decline is very good for our market and home values.
It means homeowners who are selling aren't waiting months to move. Realtors aren't having anniversary dates with their listings.
The National Association of Realtors claims an absorption rate of 6 months or less means a balanced market. The further the absorption time drops below 6 months the stronger the market leans towards being a SELLER's market.
Denver has a Seller's Market
So we are back to my first comments in this blog. We actually are in the midst of a SELLER's market in certain segments of the market. This absorption rate graph is for the Denver metro real estate market as a whole.
Look at what price segments of the market are HOT!
The highest number of homes sold this year occurred in the under $200,000 range. We have also seen significant activity in the under $110,000 range.
Market activity dropped off beginning over $200,000, but still wasn't too horrible. The range that is taking a beating is the over $500,000 category. This is understandable due to the lack of available financing at that price point.
FHA lends relatively easy up to $400k in the Denver area. Financing is what is selling homes this year!
Interest rates are at the lowest they've been in 40 years. In my entire career, I've never seen rates this low.
Home buyers today have a huge advantage. They can acquire a mortgage at a very low rate in a market that is offering many bargains.
Today is the perfect time to get into the real estate market.
If you or someone you know wants to purchase a home, please give me a call. I'd love to help you find a home, because I am getting bored making these pretty graphs! :lol: