Q4 2019 Denver Real Estate Market Update
Q4 2019 Denver Real Estate Market Update.
Hey everybody, I’ve got your Q4 2019 Denver real estate market update. How did 2019 compare to previous years? Also, strategies and predictions for what’s going to happen in 2020.
We’re talking about the Denver real estate market today. First of all huge shout out to Megan Aller with first American title. She is the amazing statistician that has compiled all of this data and made it actionable for us.
Four things I want to cover today.
Number 1: let’s check in on the inventory in our market as it’s the huge driver for the price appreciation that we continue to see.
Number two: For 2020 when does the Denver real estate market pick up?
Number three: Heading into 2020 when is the best time to buy and when is the best time to sell.
And number four: I want to give you some insight on what to watch for going into 2020 that will have an impact on affordability.
All of the information and presenting today is specific to detached single-family product. If you would like the same information on the attached product please get in touch and I can get you that for you.
Here is the inventory graph for the greater metro area of Denver from 2005 through 2019. As you can see the market has behaved almost identically for the last 7 years. The blue line represents active homes the yellow line is under contract homes and the redline is sold homes. You can see the blue and the redline converging almost every year in the spring. This means that every spring almost all the houses in our market sell. This pattern is the reason that we’ve seen double-digit appreciation every year for the last seven years. Demand continues to exceed supply which causes upward exertion on prices.
Next, Heading into 2020, when can we expect to see the Market pick-up? The first wave will be the third weekend in January. The second wave will be the third weekend in February following the Super Bowl.
So with that information when is it the best time to sell and when is it the best time to buy?
This graph is color-coded red to indicate better months for buyers and blue indicating better months for sellers. Factors being considered are active count, odds of selling, average days on market, number of price reductions, etc. The market is likely to favor those sellers who are ready to take advantage of early buyer activity. Those late to the market in the summer months are more likely to spend a longer time on the market and face price reductions. Buyers are most likely to have the highest negotiating power, mid-summer to fall.
Last I would like to touch on affordability in Denver. Most of us have a single gauge with regard to affordability and that is the price of the home. However with between 85 and 88% of buyers dependent upon a loan to purchase a property. I want to draw your attention to the importance that the Interest rate makes on affordability.
As you can see here, the average price in June 2006 was $335,000 while the average price in June 2019 was $543,000. That’s an increase of 62.2% At the same time, the interest rate in 2006 went from 6.78% down to 3.82% in 2019. Therefore the difference in the monthly payment between 2006 and 2019 for the average home increased only 16.7%. Interest rates for most buyers have a significant effect on affordability. Something to keep in mind and watch going into 2020.
If you would like any of the information I have presented please get in touch. [email protected]. www.neirteam.com