Market Report from Jack O’Connor
Here’s the latest report from veteran real estate broker, Jack O’Connor, the head of the Prestige Real Estate Group (courtesy of John Rebchook’s blog).
Late spring data are showing further evidence of a favorable shift and an early recovery for the real estate market in the Denver area—-particularly for the under-$250,000 price range. "The continuing decrease in supply we’re seeing at the low end is exactly what you would expect from the earliest stage of a general recovery," said Jack O’Connor, Managing Broker of Prestige Real Estate Group and author of the new report.
The seven–county metropolitan area has 7,849 single-family homes and 4,119 condos currently active at prices $250,000 and below, according to the latest Metrolist data. Using those values in conjunction with year-to-date sales figures for homes in that price range, the report projects that the market inventory for both home types has now dropped beneath a five month supply: 4.7 months for single family and 4.8 months for condos.
"We are getting closer to a robust sellers’ market in this price point, and our agents are reporting that in some neighborhoods we serve, we’re already arriving there," O’Connor says. The projections are particularly poignant with respect to the effect of foreclosures, says Prestige President Leeann Iacino. Area foreclosures, which are overwhelmingly centered in the lowest price ranges, are not significantly stalling the market’s progress in recovery, she says. The falling inventory in the low range has stabilized pricing there, O’Connor said. When supply dips to three months, he predicted, buyers can anticipate a resulting increase in price of 4% to 6% for that range over the following 12 months, with price increases in the $250,000-to-$500,000 range and higher ranges following sequentially.
O’Connor noted the newest Metrolist data show that over the past 12 months the Denver area experienced a 9.45% drop in inventory to 27,295 total units (inventory in June 2007 was 30,145 units). Meanwhile, homes now under contract total 8,382, a 13% increase over June 2007- the highest number of homes under contract recorded in June in the last five years. The favorable trend in contracts runs counter to the latest numbers for homes closed, down from 2007. But agents see that as a consequence of backups in the processing of new sales, resulting from personnel reductions by the mortgage industry. "The contracts you see in place now will overwhelmingly be converted to closings over the next two months," O’Connor says. The mortgage market, he added, has showed signs of loosening the restrictions on financing particularly in the lower price ranges.
Iacino says that the new market picture contains important messages for buyers and sellers. "What we’re seeing is a market that has less and less to do with the foreclosure dominated market we read about in other parts of the nation," she said. Current estimates of the foreclosure rate in Colorado show the state having fallen to the nation’s ninth highest. However, discrepancies in comparing actual foreclosures between different states, as reported by the Rocky Mountain News, suggest that Colorado may have dropped far below that.
"If you’re selling or buying a house priced $250,000 or lower, you’re probably looking at an exceptional opportunity this summer," Iacino added. "If you’re anticipating moving from a lower to a higher price range, you’ll be gaining even more potential to benefit as the recovery takes shape."