Shadow inventory and why its important for Sellers in Denver
Before we talk about Shadow Inventory we have to look at what the definition of inventory is. Inventory in real estate terms is the current number of homes that are actively on the market. When we Realtors talk about inventory, we like to express it in the number of months. You determine this by calculating how many homes are selling in a given area vs. how many homes are on the market in that same given area. By doing this it gives us an indication as to the amount of months it will take to sell the existing inventory. For example, if there are 100 homes on the market in a given neighborhood and only 20 are selling per month, it means that we have 5 months supply of inventory. This means that it would take approximately 5 months to sell all of the existing active inventory if no other homes came on the market.
Below is an indication of Months of Inventory and how it impacts price
- 1-4 months of Inventory means that it is a Sellers Market
- 5-6 months of Inventory means that this is a Normal Market
- 7+ months of Inventory means that it is a Buyers Market.
Shadow inventory are the homes that will go in to default or are currently in default and have not yet hit the market.
Standard & Poors did a Shadow Inventory Study and found that in Denver, there is an estimated 29.7 months of inventory that will hit our market in the next 2 years. This means that there will be a lot of people defaulting on their loans. The majority of the reason for a high number of defaulting loans is because many...
Massive Real Estate Growth Likely as Denver Colorado Comes of Age.
I feel an overwhelming sense of pride as I look at how this great city of Denver will evolve over the next 7 years. I am a native Coloradian having grown up in Congress Park and then Parker, Colorado. Having lived in Colorado my whole life I have seen the city grow from a small little cow town into the beginnings of truly metropolitan city. I remember a time when it would snow on Friday and you could get up on a Saturday, hop in the car at 8:00 and be in Vail at 9:30. I remember the very limited number of restaurants that were semi-good if you choose to eat out. I remember when all interstate highways in the city were 2 lanes. I remember the home I grew up in, in Congress Park, selling for $510,000 when originally purchased for $70,000 indicating massive real estate growth in only 30 years . I have watched Coors Field transform the dilapidated area of lower downtown into the thriving central urban neighborhood called LoDo. I have seen the redevelopment of Riverfront Park and a pedestrian bridge over I-25 transform a sleepy neighborhood of lower Highlands into bustling community.
Regardless if you have lived in Denver a long time or are new to the city there is evidence abound indicating growth and vitality……..and this is only the beginning.
Over the course of the next 7 years two projects will fuel massive real estate growth of the Denver...