Saturday, October 4, 2008

How's The Market October 2008?

So, How’s the Market, October 2008. All statistics are taken from Metrolist on 10.3.08

For the first time since April of 2007 the sold data for one month outperformed the same month the previous year. September of 2008 recorded 3941 single family and condo units closed. This represented a 12.31% increase over September of 2007 which recorded 3509 single family and condo’s closed.

Sold data always lags behind other indicators of market condition and one month hardly makes a trend, but to put this increase in perspective the last time Denver experienced a month over month improvement was April of 2007. April 2007 outperformed April of 2006 with the next earlier time being May 2006/May 2005. For this September to outperform the previous year is a good sign of the Denver market improving. We anticipate this trend to continue and really take hold by March of 2009.

Year to date sold data is still lagging previous years, with 33,951 single family and condo units closed through September 30th. Here’s the previous 5 years sold results through September of each year.

The year to date reduction over the previous year is 6.76% down 2465 units from last year through September. The year to date number is also coming closer to a year over year increase and we predict 2009 will have more properties sell than 2008.

Another good sign for the closed data is the difference between August and September of each year. The chart below shows that in 2008 the sold data difference this year is much improved over the last 4 years. Again, we caution this may be a one month abnormality, but we believe that the sold data will start to outperform previous by the end of 2008. It is starting just a little earlier, which is good news for homeowners. We will watch this trend over the next 4 months to see if the positive nature of the sold data continues.

The actual difference from August to September in 2008 is down 3% as compared to 19.2% for 2007, 18.01% in 2006, 21.7% in 2005 and 6.56% in 2004. The data shows that September of 2008 has the makings of a turning market.

The winner of the statistical data is the listing inventory numbers that are showing up in our market. The single family and condo home inventory continues to decrease at a rapid pace. From October of 2007 to October of 2008 the inventory decreased 19.68%. The total market inventory is as low as it’s been for an October in more than 5 years! Remember the adage, when inventory decreases, prices will…… Let’s not get too euphoric over the data, but real estate numbers for Denver are starting to really look better and better.

Finally, the homes under contract are still holding a higher level than the previous two years. Currently in October there are 6515 single family and condo units under contract. In October of 2007 there were 5566 and in October of 2006 there were 6086. 2008 appears to be holding its own with properties continuing to close over the next 4 months.

Our predictions for the market are:

· The current economic conditions will have most industries in a holding pattern for the next 90-120 days, so we do not see real estate being any different, making for a modest fourth quarter for sales in 2008.
· 2009 will outperform 2008 by more than 8% more closed properties
· 2009 will see homes appreciate in Denver by 3-4%. Some neighborhoods more than others, but all homes will be affected positively in value
· 2009 will see a little higher interest rate for homes than we are experiencing today.
· Foreclosures and short sales will be down by 25% in 2009 over 2008
· The number of homes that will close this year will be less than the previous 5 years.
· The number of homes available for sale will be less than the previous 5 years.

With this said, the next 90 days would be a great opportunity to buy a home before homes start to see appreciation occurring next year.