Statistics

Denver Metropolitan Real Estate Market Graphs

While the calculation for the “absorption rate ” (AR) is a bit complicated, the concept is simple: at the present rate of sales, how many weeks (or months) will it take to sell the current inventory if no additional properties are added to the inventory.  The calculation is based on data readily available from Metrolist, Inc, the Metropolitan Denver’s MLS service.  The base data does not include new construction, private sales (FSBO’s), or bulk foreclosed property sales, but is relativity accurate based on the data presented.  Looking at January of 2010, the AR increased considerably from December  2009, but shows improvement over the the previous two January’s.  The best explanation for the jump up over December of 2009 is the effect of the 2009 Home Buyers Tax Credit, which artificially advanced the buying “window”  for many first time buyers, plus the normal seasonality of the market.  We can assume that the new tax credit will affect the AR going forward,  but artificial manipulation of the market makes for shaky predictions.

The  Denver area median price is much improved over January of 2009, but not quite is strong as January 2008. The median price is the exact middle of all of the single family homes (residential) sold during the month of January.  It will continue to be difficult to raise the median price until better financing is available for the upper end of the market, and the unemployment picture improves.

This graph plainly shows that the available resale inventory is considerably below previous years.  The graph shows the combined inventory of detached (single family) homes and attached (condos).  While this may seem like there are many choices for the average home buyer, consider that this graph represents the entire market.  For any given home buyer, the inventory shrinks based on needs, for instance: a detached home buyer will eliminate all of the condos (4,400).  Price range will narrow the search further, as will locational issues, both wide area such as south verses north and more specific, such as cul-de-sac verses open street, or specific schools or drive times to work locations.  It is also true that at any time the available inventory has a certain number of properties that are undesirable to our given buyer, such as short sales, overpriced listings, and homes in poor condition. For that given buyer, the inventory is sparse, which will begin to push prices higher.

Total homes sold is somewhat reflective of the season, the tax credit market manipulation, and the low inventory.  Inventory that is unusually low makes finding the “perfect” home more difficult.  We can expect to see sales increase as the latest tax credit takes hold and the market moves into the spring buying season.

The  decline in the December average price is normal, and is much better than the abyss that was January of 2009.  Again, with artificial market manipulation, the 2010 graphs may be a bit unusual.