Greater Metro Denver Update August 2016 Amy Brawand Account Manager Abrawand@ltgc.com 303-877-8886
Areas of Analysis THE REQUIRED STUFF Reporting on the 7 Metro Denver Counties: Adams, Arapahoe, Broomfield, Denver, Douglas, Elbert, Jefferson Our numbers will vary from DMAR and REcolorado updates due to variations on geographical areas covered.
THE HIGHLIGHT REEL Back to School- Back to Market? Detached single family active units showed signs of tapering to 5,288 available homes for sale which is a loss of 3.3% over the previous month. Attached single family also reported a loss of 5.3% of new units from July to August bringing the count to 1,402. Both markets together represent 6,690 units for sale. Average sold price shows seasonal decline for DSF at $446,597, and an increase was reported for ASF in at $287,112. 5,734 homes were placed under contract. A balanced market with a 6 month supply of inventory would require 34,458 active units. Average days on market are higher this year due to many contracts cancelling, 28 DOM for DSF and 25 for ASF. This increase is a welcome change for Buyers. 43% of DSF and 56% of ASF homes were under contract in 7 days or less, which caused 61.4 % of homes to sell for at or over their asking price.
HOT TOPIC The effects of a Presidential Election Year on Real Estate
HOT TOPIC Election Year 2016, comparing 2008 and 2012
DSF August 2016 ELECTION YEAR - HOT TOPIC There is a natural seasonal cadence in the active unit count based on seasonal cycles. We expect to see a natural taper in market activity.
DSF August 2016 ELECTION YEAR - HOT TOPIC There is a natural seasonal cadence in the active unit count based on seasonal cycles. We expect to see a natural taper in market activity.
DSF August 2016 ELECTION YEAR - HOT TOPIC There has been a decrease in active units year over year when reviewing each quarter. No outliers exist when specifically looking at election years.
DSF August 2016 ELECTION YEAR- HOT TOPIC Typical active decreases are approximately 19% in the last 10 years. Both election years are within the realm of normal seasonal decline.
DSF August 2016 ELECTION YEAR - HOT TOPIC Buyer activity is also subject to natural seasonal patterns. We expect to see a decrease in buyer activity in the winter months.
DSF August 2016 ELECTION YEAR - HOT TOPIC Denver s buyers follow the seasonal cycles of more activity in the warmer months. Slowest time is in Q4, with a large uptick up in Q1.
DSF August 2016 ELECTION YEAR - HOT TOPIC 2008 showed declines in contracts, while 2012 saw great gains over the previous year.
DSF August 2016 ELECTION YEAR - HOT TOPIC Average decrease in contracts for Q4 is approximately 25% less than Q3 Both election cycles are within normal parameters.
DSF August 2016 ELECTION YEAR - HOT TOPIC Same data for closings, since they follow the under contract line we should not be surprised. Please note we review Q1 following election year for any metric based on sold information.
DSF August 2016 ELECTION YEAR - HOT TOPIC Again, with a heavier selling season in the summer, we fully anticipate winter months to slow.
DSF August 2016 ELECTION YEAR - HOT TOPIC Reviewing year over year numbers, 2012 outperformed 2011 significantly.
DSF August 2016 ELECTION YEAR - HOT TOPIC Historically we anticipate closings to slow approximately 19% from Q4 to Q1. 2008 Presidential Election year was a normal seasonal slow down and 2012 showed a stronger market.
DSF August 2016 ELECTION YEAR - HOT TOPIC Average sold prices also naturally taper in winter months. Please note we review Q1 following election year for any metric based on sold information.
DSF August 2016 ELECTION YEAR - HOT TOPIC Average sold prices also naturally taper in winter months.
DSF August 2016 ELECTION YEAR - HOT TOPIC Year over year transitions showed that average sold prices increased in 2012, but were down in 2008.
DSF August 2016 ELECTION YEAR - HOT TOPIC Normal pricing declines for Q1 are -1.5%. 2008 showed on trend in this transitional quarter, however 2012 remained strong as demand was high.
DSF August 2016 ELECTION YEAR - HOT TOPIC Average days on market typically stretch in winter months. Please note we review Q1 following election year for any metric based on sold information.
DSF August 2016 ELECTION YEAR - HOT TOPIC Average days on market typically stretch in winter months.
DSF August 2016 ELECTION YEAR - HOT TOPIC Days on market actually declined over pre-election year significantly.
DSF August 2016 ELECTION YEAR - HOT TOPIC Normal days on market increase for Q1 are 7%. Both election years are in the scope of normal market transition.
DSF August 2016 ELECTION YEAR - HOT TOPIC The ratio of buyers to sellers typically increases into the winter months. Please note we review Q1 following election year for any metric based on sold information.
DSF August 2016 ELECTION YEAR - HOT TOPIC The ratio of buyers to sellers typically increases into the winter months.
DSF August 2016 ELECTION YEAR - HOT TOPIC When our market picked up in 2012, the Presidential Election did nothing to deter the pace of our market.
DSF August 2016 ELECTION YEAR - HOT TOPIC In 2008, the increase in inventory was on trend with the cycle for that year. When our market picked up in 2012, the Presidential Election did nothing to deter the pace of our market.
ASF + DSF PRICING: GETTING IT RIGHT The market remains fast in August with many homes selling very quickly. For homes on the market 2-3 weekends or longer, it may be time to consider a price reduction.
MARKET BASICS DSF With increasing prices, many consumers are nervous about a bubble. The active line in green displays the significant difference in units from where the bubble was formed versus current market conditions.
MARKET BASICS DSF MOM A: -3.3% U/C: +4.5% S: +3.5% YOY A: -4.8% U/C: +2.6% S: +5.8% Low A: 2,272 (Mar 2015) U/C:1,971 (Dec 2013) S: 1,770 (Feb 2011) High A: 23,442 (Jun 2006) U/C: 5,865(Jun 2013) S: 4,857 (Jul 2013) Historical Avg A: 12,276 U/C: 3,754 S: 3,030 Anticipated Trend A:Taper through end of 2016. U/C: Noted slowing as Buyers relax. S: Will follow the under contract trend.
MARKET BASICS ASF With increasing prices, many consumers are nervous about a bubble. The active line in green displays the significant difference in units from where the bubble was formed versus current market conditions.
MARKET BASICS ASF MOM A: -5.3% U/C: +2.2% S: +4.5% YOY A: -2.3% U/C: +1.5% S: -2.6% Low A: 758 (Mar 2015) U/C: 421 (Nov 2007) S: 432 (Jan 2011) High A: 8,760 (Jun 2006) U/C:1,813 (Jun 2015) S: 1,686 (Jul 2015) Historical Avg A: 3,749 U/C: 1,084 S: 906 Anticipated Trend A: Plateau through October U/C: Slowing in August. S: Will follow the under contract trend.
INVENTORY DSF MOM: -6.6% YOY: -10.0% Historical Avg: 4 Low: 1 (Dec 2015) High: 8.1 (Feb 2008) Anticipated Trend: Slow gains through fall. Currently sits at 1.4 months.
INVENTORY DSF The under $400,000 market is fueled by the two largest portions of our demographics; Millennials and Baby Boomers. These markets will remain competitive for Buyers. Move up Buyers will have a great opportunity to sell high and face less competition at higher price points.
INVENTORY DSF There is a true under supply of detached homes up to $1M. Minimal development anticipated in 2016 will force this market to remain competitive.
INVENTORY ASF MOM: -9.3% YOY: +0.3% Historical Avg: 5 Low: 0.7 (Dec 2015) High: 10.7 (Jan 2006) Anticipated Trend: Minimal gains through fall. Currently at 1.0 months of inventory. The Denver attached market will remain highly competitive for Buyers until a resolution is made in regards to builder defect regulations. Similar to the detached market, a slight tipping of the scales from the same time last year in their favor as more listings enter the market.
INVENTORY ASF The under $400,000 markets are anticipated to remain strong for the foreseeable future. Luxury markets are highly dependent on location and condition. Numbers are very volatile due to only a few transactions.
INVENTORY ASF Greater Metro Denver is a market fueled by wealth and not credit. As long as migration to Colorado remains strong and development is stalled we will remain in an inventory crunch.
PRICING DSF MOM: -2.2% YOY: +8.8% Historical Avg: $319,128 Low: $230,878 (Jan 2009) High: $461,056 (August 2016) Anticipated Trend: Steady gains of 8-12% from previous year. Seasonal decline reported, $446,597. As projected last year, with minimal gains in inventory with continued record levels of migration this number continues to climb.
PRICING ASF MOM: +0.8% YOY: +13.0% Historical Avg: $193,122 Low: $138,239 (Feb 2009) High: $297,697 (August 2016) Currently sits at $287,112 Seasonal decline in average sold price as inventory looses entering fall. Anticipated Trend: Until inventory makes larger gains, appreciation will continue.
PRICING ASF + DSF Slight decreases at higher price points while lower priced homes are still seeing some multiple offers.
DISTRESSED MARKET DSF MOM: 0% YOY: 0% Historical Avg: 16% Low: 1% (August 2016) High: 41% (Mar 2011) Anticipated Trend: Remain low to nonexistent as migration to Denver remains strong pushing sales prices higher. Currently sits at 1% Buyers hoping to find homes under fair market value will be left empty handed. Once distressed properties enter the MLS they will likely be bid up to or over market value.
DISTRESSED MARKET ASF MOM: 0% YOY: 0% Historical Avg: 19% Low: 0% (August 2015) High: 51% (Jan 2011) Anticipated Trend: Remain low to nonexistent as migration to Denver remains strong pushing sales prices higher. Currently sits at 0%, a total of 1 condo short sales, 2 REO and 4 HUD in August 2016. Buyers hoping to find homes under fair market value will be left empty handed. Once distressed properties enter the MLS they will likely be bid up to or over market value.
THE SPEED OF THE MARKET ASF + DSF MOM: -7.4% YOY: -4.4% Currently at 48.5% We will begin to see this number decrease through the remainder of 2016. Historical Avg: 29.8% Low: 5.3% (Dec 2010) High: 62.7% (May 2015) Anticipated Trend: Peaked in May, steady decline through the end of the year.
THE SPEED OF THE MARKET DSF Pressure remains highest for properties in the under $400,000 range. Even luxury prices are reporting many properties going under contract in 7 days or less.
THE SPEED OF THE MARKET ASF Demand remains at peak levels for homes up to $400,000.
THE SPEED OF THE MARKET DSF MOM: +12.0% YOY: +47.4% Historical Avg: 76 Low: 18 (Jul 2015) High: 125 (Feb 2007) Anticipated Trend: Slow gains through fall. Currently at 28 days to contract. With many Buyers and Sellers digging in their heels, properties are hitting the market for a second time increasing this measurement.
THE SPEED OF THE MARKET DSF Immense pressure on the under $400,000 market with decreasing days on market at higher price points.
THE SPEED OF THE MARKET ASF MOM: +13.6% YOY: +66.7% Historical Avg: 81 Low: 13 (Jul 2015) High: 133 (Jan 2006) Currently at 25, up from 22 days in July 2016. Similar to the detached market, this number is up due to 25% of transactions falling apart and then going back under contract. Anticipated Trend: August begins to show signs of slowing, slow gains through fall.
THE SPEED OF THE MARKET ASF Immense pressure on the under $400,000 market.
ODDS OF SELLING A calculation based on all active, under contract, sold and expired listings in the market place This number is used to predict the likelihood of a Buyer and Seller agreeing to exchange property in a specific month. This number is not what people expect it to be, even in a hot market, some homes do not sell.
ODDS OF SELLING DSF MOM : +1.7% YOY: +2.1% Historical Avg: 38% Low: 20.7% (Jan 2011) High: 70.7% (Mar 2015) Currently sits at 59.5%. Sellers late to jump on the bandwagon in August and September have to correct prices due to waning market activity later in the year. Anticipated Trend: Peaked May and will cool through the winter months.
ODDS OF SELLING DSF Highest odds of selling are in the under $400,000 markets. The trend is clear again that move-up Buyers have great opportunity.
ODDS OF SELLING ASF MOM: +1.9% YOY: -0.4% Historical Avg: 40% Low: 16.1% (Dec 2006) High: 77.3% (Mar 2015) Currently sits at 69% Minimal development prohibiting introduction of new units to the attached market. This will continue to fuel the market. Anticipated Trend: Relative plateau until new units are developed and released into the market.
ODDS OF SELLING ASF Again odds of a sale in the first 30 days are most favorable for homes under $400,000.
CLOSED TRANSACTIONS DSF 2016 is very much on pace year over year, up 2.22%. August slid in with a nearly 6% gain making up for July.
CLOSED TRANSACTIONS ASF Attached markets also on pace for similar closing volume from 2015 to 2016. Notable slowing in July as a singular month.
The END Thank you!