Is Denver’s Real Estate Market Seeing A Cooling Off Period?
7.9%; 8.2%, 8.4%- These are the last three Case Shiller Home Price Index figures for Denver’s Real Estate market. What does that mean? Well, check out the most recent HPI to read a little more. On one hand there is data to support that values are continuing to rise. With 7.9% year over year growth in Denver for home prices, you would say “Ray, your crazy to think Denver is seeing a cooling off!”. On another hand, when you look at a .50% decrease in the last three months (8.4% to 7.9%) you have to think deeper.
Demand is still high. There is still lack of inventory. In looking at an appraisal on my desktop I see an appraiser note Median Comparable Sales Price as increasing on this appraisal ($500K home). On the inventory analysis, the appraiser is showing comparable sales down in last three months, inventory issue? Is the inventory issue giving the appearance of a cooling off in Denver’s Real Estate? On a refinance I am completing the client refinanced in March 2015 (appraisal $205K), and will close this month with value at $295K on her home. A 43% gain in 28 months or 1.53% per month for her. The inventory analysis shows Median Comparable Sales Price as increasing, and days on market as decreasing (currently avg 15 days in her neighborhood).
I spoke to a trusted Real Estate agent friend of mine today. She said she is seeing price reductions on a high level. Is that because they were listed too high to begin with? Hard to say, right? Sellers have had the upper hand in Denver’s Real Estate market for some time. Are buyers pushing back? She is recommending to sellers to go back to getting pre-sale home inspections and making sure their properties shine. Afterall, you only get one chance at a first impression.
Purely from a year over year perspective without getting gritty into a thousand details, one could surmise Denver is seeing a cooling in Home Prices, but don’t get that confused with they are leveling off or we are in a bubble. Just read what is said in the Case Shiller report: “Home prices continue to climb and outpace both inflation and wages,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Housing is not repeating the bubble period of 2000-2006: price increases vary across the country unlike the earlier period when rising prices were almost universal; the number of homes sold annually is 20% less today than in the earlier period and the months’ supply is declining, not surging. The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices.”
What is my take? Simple. Look at the license plate next to you on your way home tonight. Count the cranes in Denver on your Friday lunch break (heck make a game of it). Check where Millennials are moving (Denver #6) and the unemployment rate in Denver (2.3%). So do I see there is a bubble in Denver? Would I be looking to buy a home if I was ready, yes. Has owning homes in Denver worked out well for my family, nothing else has given me the returns I have seen on my Real Estate holdings. So, take it for what you will , but don’t just listen to the noise and think deeper~