Webinar #12: Metro Denver Real Estate Trends

Charles Roberts presents an analytical overview of the major real estate trends in our Denver Metro residential market, specifically honing in on the Denver sub-market.

Property records and data are reviewed at many different levels (neighborhood, zip code, town, region, etc.) in order to gain a deep understanding of the local real estate conditions. In addition, we compare historical data with current economic data to try to predict what lies ahead.

This session provides an analytical overview of the major real estate trends in our Denver Metro market. You will leave this session with a solid understanding of the residential and income housing market in and around Denver.

Notes on the market from Lon Welsh, the Founder & Chairman of Your Castle Real Estate.

  • Current showing activity is strong
    • As measured by the number of showings / active listing in November and December 2017.
    • A little better than any of the prior five years.
    • This is likely driven lack of inventory.
    • It’s a great time to list a house.
    • If you have a buyer, if you could start seriously looking in January instead of later in spring, it’ll be less competitive.
    • Conditions are setting up for another busy spring
  • Inventory is low
    • Overall, 1.0 MOI (months of inventory) – extreme seller’s market
    • 1.1 for homes
    • 0.8 for condos
    • Net, about the same as the past few years at this time of year.
    • Remember: inventory hits a low point around Christmas and usually peaks in early summer
  • Price gains are strong
    • Overall, average price +8.4% for 2017 vs 2016
    • +8.0% for homes
    • +10% for condos
    • A little less appreciation than prior years, but not a lot less
    • Given low inventory, strong demand and a strong economy, we’ll likely see 5-7% price gains in 2018
    • If you are a fan of median (vs average) prices; you see the same story line
  • Under contract trend is hard to read
    • One MLS report shows that Dec ’17 vs Dec was down -2.6%; the other main summary report shows +5.2%
    • Overall, I suspect we’re down a little for UC activity for 4Q17
    • No meaningful difference between homes and condos
  • Sold volume is up
    • One report shows all of 2017 up +3.0% for unit count, the other shows +6.8%.
    • Regardless, sold volume is up a little; baffling since the inventory was generally a little tighter in 2017
    • Homes and condos both grew about the same pace
    • Sold volume by month was stronger in beginning and middle of ’17 and softer to negative in the final months of ‘17
    • That, combined with the mixed signals on UC count, leads me to  think that unit count closed in Jan ’18 could be down from Jan ’17 a bit.
    • If you see headlines that “sold volume is slowing down” (true) and thus the “bubble is about to burst” (likely false), the reporter likely has the wrong conclusion.  Given the strong showing traffic, the decline in unit sales count is probably driven by inventory shortages.
  • Discounts are steady
    • On average, properties sell for almost exactly the ask price
    • Smaller properties sell at a premium and luxury homes at a small discount
    • No real change in discount behavior from last year
    • Only discount opportunity is for stale listings.
      • Average DOM = 25 days; so I’d define stale as 2x that, or >50 days.
      • You’d want to adjust that for price point and neighborhood, of course.
  • Marketing time (DOM)
    • Essentially unchanged to selling a little faster than last year.
    • Makes sense with tight inventory.

Overall, 2018 might look a lot like 2017 or 2016.  There’s nothing on the horizon to suggest it’ll be much different.

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Authors
Chris Lopez
Chris Lopez is a Denver area real estate entrepreneur and investor, as well as the host of Bigger Pockets’ House Hackerz and the Denver Real Estate Investing Podcast.
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