Monday, November 3, 2008

How's The Market November 2008?

So, How’s The Market: November 2008

All data is taken from Metrolist, Inc on November 3, 2008.

Inventory drops below 24,000 units. This is the first time since March of 2005 that single family and condo units have totaled less than 24,000 units in a given month. As of today the inventory for the Denver Metro area in single family and condo units is at 23,697. In March of 2005 the inventory stood at 23,647. It has been 43 months since the inventory for residential real estate hit this low of a number. Take a look at the inventory totals for the past 3 ½ years!

The good news indicator of this chart is Denver is absorbing more real estate than most national markets. The lower price points are really becoming a hot commodity. Looking at prices between zero and $250,000, the inventory for past November months until this November shows a dramatic drop in available housing this year.

And here’s the condo inventory in November of each year between zero and $250,000.

As you can see, the inventory for November for both single family and condos has decreased to their lowest levels in five years by a significant amount in the lower price ranges. This leads us to conclude that the inventory will continue to drop at a faster rate, increasing the probability of prices rising in the lower price ranges in 2009 and 2010 at a faster pace then previously predicted. Appreciation of these lower price ranges might increase as much as 6% in 2009 based upon the decreasing inventory.

Let’s look at the upper price ranges to see a comparison of inventories in Denver.

The numbers clearly indicate inventory in the upper price ranges of $750,000 to $2 million have not decreased at all and have increased in November of each of the previous 5 years.

We can conclude that the price ranges below $500,000 in the Denver metro area will continue to sell briskly, with homes priced $500,000-$750,000 somewhere in between and most likely it will take through 2009 before upper end properties will see any real appreciation.

So why would it be a good time to buy an upper end property? The best value for value today will be in the price ranges above $750,000. Getting a property at bargain values will be a good long term investment. If you wait until the market turns you might miss out on the upside if you are a buyer.

For example, if you take a 1 million dollar property that is appreciating at 4% per year, that is a $40,000 increase in one short year. If you take a $250,000 dollar property, appreciating at 4%, that will equal $10,000. Even if an upper end property does not start to appreciate till 2010, you will still be substantially ahead when buying an upper price range property today versus holding onto a lower priced property. The real deals in today’s market are at the upper end price ranges. You can build into the home a terrific price and terms to favor the buyer and take advantage of buying at the lowest point of the market. The inventory does not lie.

If you are thinking long term for your housing needs, you can really buy properties in the upper price ranges at a discount and get some good terms. If you ask the seller to buy your interest rate down you can get a discounted sales price and lower interest rates. These types of buying windows, where you can obtain discounted sales prices and still get terms, do not last forever. Those looking to move in the next year as well as those that have been sitting on the fence, now is the time to buy the home of your dreams and best take advantage of the market.

Sold data for 2008 is lagging behind previous years, but this indicator is starting to flatten out. In September of 2008 we reported that the sold data outperformed the previous year’s data. In October of 2008 the number of single family and condos closed was 3341 units. This was down 57 units from the previous year, but we have not seen two months in a row that the sold data has approached past years levels. With the current economic conditions for that blitzed the country in October, the sold data being almost level to one year ago is a very strong sign the real estate market in Denver is starting to outperform previous years.

The number of homes under contract is having a seasonal decrease to 5794 single family and condo units as of this writing. Twelve months ago there were 5566 units under contract or a 4.1% increase over last year. The confidence in Denver real estate is very good compared to most national markets and we would anticipate this to continue into 2009.

What should you do if you are a buyer today?

· Get qualified to buy the home of your dreams today. That home can be had a great price.
· If you are an investor that is looking long term, buy an upper end property for a rental. There are few rental properties in the upper end market and you will be able to find a tenant quickly.
· If you are a first time home buyer, the more suburban markets have more inventory then the City and County of Denver. Expand your search parameters, as you should buy now to take advantage of next years appreciation.

What should you do if you are seller?

· Try to be the entry price point for your product and location.
· Add terms to attract buyers to your home.
· Be the best conditioned and buyer friendly home, meaning fix the little things before selling.

For more information, statistics, or how these numbers affect the value of your property contact Michael Kozlowski.

Michael Kozlowski
Broker Associate/Owner
Prestige Real Estate Group
9200 E. Panorama Circle, Suite 140
Englewood, CO 80112
303.949.2755 Cellular
303.328.2951 Facsimile