That was a bobble and not a bubble.
This month's Market Stats Report presented by Megan Aller for First American Title at West + Main Homes held a few surprises, but also showed that the 6-year Housing Cycle that we are at the tail-end of is progressing as predicted. Please note: the contents of this report only reflect detached single family (DSF) homes in the 7 Metro Denver Counties: Adams, Arapahoe, Broomfield, Denver, Douglas, Elbert and Jefferson.
Here are some of the highlights:
+ As expected, active units for sale began its seasonal taper in October falling by 8.4% to 5,646 units for sale.
+ Days on market are beginning to grow as we reach our slower months of the year. 31 Average days to contract or 14 median days to contract in October.
+ 3 out of the last 6 Octobers in this real estate cycle (2013-2018) reported an increase in price, this year represented the largest increase from September to October with a 4.1% increase in average sold price to $516,007.
+ Close to list price ratios dropped to 98.9% of the last asking price. This metric demonstrates negotiating power for buyers. This advantage will last through January.
+ Flash sales, or units under contract in the first weekend are down to 35.2%, this measurement will continue to taper through January.
Rising Rates Got you Down?
+ The Federal Reserve made statements in September that interest rate will be increased as 2018 draws to a close and pending into 2019.
+ It is important to note that when the Federal Reserve raises their interest rates that there is not a direct tie to fixed mortgage rates but those with ARMs and HELOCs should be aware that their monthly payment may be higher.
+ It’s likely that interest rates tied to long term loans will be higher going into 2019 which will ultimately reduce the amount of home a borrower may qualify for.
** These graphs are examples of monthly payments based off 30 year fixed loans with a 10% down payment for principle and interest payments only, taxes and insurance are not included.
Don't call it a Buyer's Market.
+ The blue bar in the graph below represents the total active units we had in October vs. the red bar shows the amount of inventory we would need to offset demand and create a market in equilibrium. In October Metro Denver had 31% of the inventory required to offset demand.
+ So, if you are waiting to Buy thinking that a slight increase inventory will lead to a more balanced market, that will likely not happen anytime soon.
+ But, you might have a little more negotiating power if you purchase a home before the 2019 market starts. Bidding wars pushed prices over asking price early in 2018, a decline is noted in the second half of 2018:
+ Now is also a good time to shop if you like to take your time. Days on market tend to grow into cooler months as homes spend more time on the market. Buyers who need more time to make decisions will benefit from shopping from October through January. In February the market typically picks up again and days on market drop.
Hopefully you have found this information helpful. If you would like to receive the complete 100-page report, or if you have questions, please contact us.