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Tuesday, May 24, 2016

Is Denver Really Experiencing a Housing Bubble?

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Today we wanted to take a minute to talk about the so-called bubble looming in Denver. Let's take a look at some stats from August 2007 to April 2016 to debunk this notion of a bubble. August of 2007 was certainly near the height of the market and we're obviously at the height of the market here in Denver.

In August 2007, there were 30,000 units available whereas now, we have just 4,390. Looking at the total number of transaction, August 2007 saw 4,300, and this last month, we saw 4,200. Average days on market is interesting as well, with 95 being the average back then, and 31 being the average last month. Similarly, with the number of homes going under contract in seven days or fewer, it was 61% in April of this year, compared to just 8% in August 2007.

Back then, cash transactions were lower as well at 10%, compared to 15% last month. If we look at list price compared to closing price, homes sold at 94% of asking price in August 2007. This April, homes sold for a little over 100% of list price. If you're comparing the height of the market of 2007 vs. the height of the market today, it's substantially different. The number one reason is the influx of population moving to Denver, our economy is booming, and inventory is low. 

Average sold price for single family homes reached a new record at $440,000.

Let's get some perspective on the current market. We have just 3,820 detached single family homes and 1,100 attached single family homes. The average sold price for single family homes actually reached a new record at $440,000, and attached single family homes came in at $285,000. Last month we had 5,270 homes placed under contract. To create a balanced market, we need 31,000 active units to offset the demand. For homes under $600,000 we have roughly 1.4 months of supply.

Interest rates are of course still low - back to three-year lows, in fact. You're probably looking at 3.5% to 3.75% depending on your qualifications and credit score. The market is challenging, but it's still a good time to buy. We have several different strategies that we're using, and we haven't had a buyer yet that we weren't able to find a house for. And of course, it's an amazing time to sell.

For any assistance we can give you, please feel free to reach out. We'd love to help!