Every month we show you the most recent Market Snapshot to give you an update on the state of the market. This month we’re going to walk through each metric in the report to give you a better understanding of what the numbers mean, and how you should use them if you’re looking to buy or sell real estate.
If you are looking to buy or sell a home, it is important to understand what the market is telling you. We are continuing to predict a market with low inventory and a lot of unsatisfied demand. The number of listings is still unable to keep pace with the number of buyers, and we do not see this changing in the foreseeable future.
The Market Snapshot chart above shows two different time periods, Prior Month and Year Ago. Prior Month compares the most recent month, to the month before (Oct. ’16 vs. Sept. ’16). Year Ago compares the prior month to the same month one year ago (Oct. ’16 vs. Oct. ’15).
An important point to note is that there are definite seasonal differences in real estate so using month-to-month comparison trends can be somewhat misleading. For example, we expect fewer properties to come on the market during the fall/winter and more listings during the spring/summer. So don’t get too caught up in month-to-month data. Review it, but the year-over-year data is more relevant, useful, and instructive.
Active: This is the number of active properties on the MLS. The number of active properties dropped 8% in the past year, from 6,964 to 6,425. This is the lowest number of listings for an October since records have been kept. This means that we have too few listings to satisfy the demand in the market, and the number of listings is continuing to drop. Since demand (people wanting to buy houses) is outstripping supply (people selling houses) our only conclusion can be that the strong seller’s market will remain until that changes.
New Listings: This is the number of new listings that were put on the MLS. The number of new listings dropped 9% in the past year, from 4,225 to 3,828. This metric is closely related to the number of active properties. There were fewer new listings put on the market this year than last year. So, it’s the same conclusion as above. We have a lower inventory of properties on the market for buyers to choose from, causing higher demand with lower supply.
Under Contract: This is the number of properties under contract on the MLS. The number of under contract properties rose 3%, from 4,578 to 4,694. Even with the reduced inventory, people are still looking to buy homes. This number reflects the demand of the market – buyers’ wanting to buy – even in a market with record low inventory to choose from.
Sold: This is the number of properties that were sold. The number of sold properties dropped 9% in the past year, from 3,753 to 3,412. While everyone talks about what a strong real estate market we have it is shocking that the number of homes sold is dropping radically, not climbing! Again, this is almost entirely a reflection of the limited inventory (few actives and new listings) for buyers to choose from. As much as folks want to buy homes, there are so few on the market the number of homes sold is plummeting. Our Front Range population is increasing 50,000 per year and many of these folks want to buy homes but are not able to because of the limited supply. This is the reason we believe our seller’s market is going to stand strong for several more years – lots of buyers and not enough properties for them to buy. Until more homes come on the market, the demand will continue to surpass the supply.
Average Combined Days on Market (CDM): In a balanced market, 90 CDOM is about what we see. In our strong seller’s market this number is very low at 29. This is another indicator of the strength of this housing market.
Average Sold Price: Prices have been rising in Denver metro for the past seven years. It is interesting to note that for the past 45 years the average price increase for a single-family home has been 6.3 percent per year, just below the 8% from the past year. Given everything we have discussed above regarding the lack of inventory and demand for housing, we expect prices to continue to rise for a number of years.
Median Sold Price: The median sold price is the midpoint number of all the homes sold on the market. It went up 8%, reflecting the dynamics of the market.
We realize that this is a lot to digest so that is why we are here to talk to to you and see how all this information applies to your situation. Give us a call at 303-991-9878 and we can field any questions you might have!
