January is a peculiar month for real estate. As residential brokers we generally experience a slow down concerning transactions during the 4th Quarter of the year due to the holidays i.e. Thanksgiving and the December holidays. With few exceptions usually due to tax strategies closings during the last week of December are rare.
When January comes along we assume New Year’s Resolutions may include a new home. Historically January is a slow month as the days are short, the weather is cold and not the most conducive month of the year to go touring houses. Yet I have advised buyer clients January is a great time to look. Even though inventory is generally limited the slower pace and lack of competition can be an advantage.
Yet even I was surprised with the January 2019 market report. According to the latest marketing statistics from REcolorado, the Denver Metro market continued to experience increased inventory levels in January, due in part to 4,817 new listings coming on the market, more than double what we saw last month (December 2018).
This means buyers have even more options than they’ve had in quite some time, which may help relieve some of the stress home buyers have been feeling over the past few years. There is currently 8 weeks of inventory, 1 week more than last month and 2 weeks more than last year.
In January, home sales decreased 8% from last year and are down 24% from last month. The number of homes that moved to Under Contract in December was 8% higher than last year, indicating it was an active month. The rate at which home prices are increasing has continued to moderate in January, with the average price of a single-family home rising to $460,525, up 3% year over year.
From experience while a two month supply of housing may be positive for buyers based on historical averages the market for buyers and sellers is closer to equilibrium when inventory is in the 4-7 months range depending on the specific regional market.
The 3% year over year increase in average price mirrors inflation thus while may be disappointing to many homeowners who purchased within the last 12-24 months in reality a 3% growth is healthy and sustainable.
I believe February and March 2019 will be interesting to watch i.e. how much inventory increases and to see if buyers are active. Interest rates are 1% point higher year over year yet are still historically low. The factors that we should watch for beyond inventory and closing activity are:
- Migration Into and Out of Metro Denver.
- Activity in the luxury market; usually an early indicator of market trends.
- Price Adjustments from Original List Price.
- Days on Market, higher number weaker market.
Anecdotally I am seeing softness in the market. At present I am listing a residence in Congress Park. Due to its existing cosmetic condition the home is priced 20% below 6 month sales market comps for the neighborhood. While viewing activity has been strong; an offer has not been presented. If the home was on the market 18-24 months ago at the same asking price there would have been multiple offers; many above asking sans contingencies. Will keep you all posted.
Of note concerning last week’s blog about the unit in Writer Square there has been a price adjustment from $725,000 to $710,000.