The number of homes for sale has not yet jumped as is typical for spring. It’s a strong possibility that the rising home prices are holding back many “would be sellers” because the home they want to buy has gone up more than they are comfortable spending. Instead, more homeowners are considering renovating their current homes. For buyers in our Denver metro market, competing against multiple offers remains the story under ~ $350,000. While the market has slowed slightly for homes over that price range, the median days on market remains staggeringly low at only 7 days. Here are the highlights:
# HOMES FOR SALE (INVENTORY) DOWN 6% FROM LAST MONTH, 14% FROM LAST YEAR (5,428 Homes For Sale Currently)
# SOLD HOMES UP 3% FROM LAST YEAR, UP 5% FROM LAST MONTH (3,385 homes sold in Feb 2016)
- WHAT’S TRENDING: Inventory is how we determine how many homes are for sale compared to how many are selling per month. If you look above, 3,385 homes sold last month and there are 5,428 homes for sale. This is 1.6 months of inventory…meaning if no new homes came on the market we would be “sold out” in about 1.6 months. Buyers are still feeling pinched with limited options and multiple offers well over list price common. Appraisals are starting to loosen up, however, making it easier for buyers when offering over list price, Seller rent-backs are still becoming more common as many sellers are shying away from contingencies.
- WHAT DOES THIS MEAN: Whenever inventory is below 4-5 months it favors sellers. Right now we have about 1.6 months of inventory. The longer inventory stays low the more it weighs in the seller’s favor. Buyers need to act quickly when they find a home they like and make an aggressive offer. Coming in way under list price expecting a counter is not a smart strategy often results in getting outbid. Sellers need to have a strong pricing & marketing strategy to get the MAXIMUM price & buyer interest immediately when coming on the market. Even more importantly, your listing agent needs to help you work with the appraiser to try and get an appraisal that supports what a buyer is willing to pay. Appraisers are still going on historical data and have a tough time accounting for the premiums buyers are willing to pay in the low-inventory market.
- WHATS TRENDING: Median sold price is $330,000 and keeps climbing despite predictions that this will slow.
- WHAT DOES THIS MEAN: People keep asking me “is this a bubble. My response: until inventory gains over take the # of homes sold, no. And once this does happen…due to population growth projections and rising rental rates, the values will hold as demand stays steady for home purchases. We eventually will see a slow down in price increases but I highly doubt we will see a decline. Many industry experts feel similarly. The challenge this presents is mostly for appraisals. They are based on “HISTORIC” data while buyers are making offers based on present demand and inventory levels. Some homes are not appraising for what buyers are willing to pay. Sellers are frequently asking buyers to cover some (or all) of the difference if the appraisal comes in below the contract price.
MEDIAN DAYS ON MARKET IS DOWN 3-% TO 7 DAYS
Nothing really needs to be said about this or it would over-analyzing. Bottom line….homes are selling super fast still. This will be interesting to watch as we move into the spring/summer season. I will keep an eye on this and let you know what’s going on.