Tag Archives: Denver Housing

Realtors Warn Metro Denver Housing Market Is “Now Pulling Back In A Big Way”

Home sales in the metro Denver region collapsed in September, forcing sellers to heavily discount asking prices which boosted inventory of properties available for purchase at an unprecedented rate, according to the Denver Metro Association of Realtors (DMAR), as per The Denver Post.

“The housing inventory and home price adjustments are normal and expected,” said Steve Danyliw, chairman of the DMAR Market Trends Committee, in the report. “What’s not normal? Sales of single-family homes priced over $500,000 dropping 33% from August to September. For those sellers, that’s real turbulence.”

Earlier this summer, DMAR Market Trends Committee saw indications the housing market was cooling but was shocked when it completely froze in September:

“The number of single-family homes sold in September, across all price ranges, dropped 30.5% from August and is down 21.4% compared to September 2017. Condo sales fell a dramatic 42.9 % on the month and are down 17.3% year-over-year,” said The Denver Post.

For years, millennial buyers in metro Denver were plagued with the lack of affordability. When home sales dropped in September, the Denver Post notes that very little buyers showed up.

The inventory of condos and homes available for sale at the end of September shot up to 8,807, an increase of 7.04% from August and about 16% move y/y.

The median price of a single-family home in metro Denver declined to 3.8% from August to $428,000 but remains up 6.1% y/y. Condos, which are popular with millennials, continued to show gains, as its median price rose 1.73% to $301,625 last month and is up 12.8 YTD.

Most of the carnage hit the luxury end of the market. Sales of those homes worth more than $1 million collapsed 44.4% between August and September.

Last month, Bank of America rang the proverbial bell on the US real estate market, saying existing home sales have peaked, reflecting declining affordability, greater price reductions and deteriorating housing sentiment. The report was published by BofA chief economist Michelle Meyer, who warned: “the housing market is no longer a tailwind for the economy but rather a headwind.”

“Call your realtor,” the BofA report proclaimed: “We are calling it: existing home sales have peaked.”

Chart 1 shows there is a leading relationship between the trend in affordability and in home sales — a simple regression suggests the lead is about three months. In major cities, affordability continues to be a significant problem for many Americans amid a rising interest rate environment and elevated home prices, existing home sales should remain under pressure for the foreseeable future.

https://www.zerohedge.com/sites/default/files/inline-images/BofA%20Real%20Estate.png?itok=nDNaGSFX

Chart 2 indicates that the share of properties with price discounts is on the rise, suggesting that sellers are unloading into weakening demand. The data from Zillow reveals that 15% of listings have price reductions, the highest since mid-2013 when home sales tumbled last.

The University of Michigan survey reveals a worsening mood in the perception of buying conditions for homes. Respondents noted that home prices have become too high while rates have become restrictive.

https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/BofA%20Real%20Estate%202.png?itok=uQkc4Oq3

While BofA makes clear the housing market is starting to stall, the Federal Reserve is conducting quantitative tightening and rapidly increasing interest rates to get ahead of the next recession. In other words, liquidity is being removed from the system and the cost of borrowing is headed higher – an environment that is not friendly to real estate and could be the key factor explaining the weakness in metro Denver housing and abroad.

https://www.zerohedge.com/sites/default/files/styles/inline_image_desktop/public/inline-images/BofA-Real-Estate-3.png?itok=UjxnAh_P

Source: ZeroHedge

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Eviction Courts Overwhelmed As Housing Crisis Unfolds In Colorado

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It is official. Consumers in Colorado appear to be tapped out.

This comes at a time when the recovery is now tied for the second-longest economic expansion in American history. The stock market is near an all-time high, unemployment is the lowest in two decades, consumer confidence is beyond euphoric, and Trump tax cuts are stoking the best earnings quarter since 2011 — unleashing a record amount of corporate stock buybacks.

While a real economic recovery could be plausible this late in the business cycle, the unevenness of the recovery has left many residents in Colorado without a paddle. Accelerating real estate and rent prices across Colorado are squeezing residents out of their homes at an alarming pace.

According to ABC Denver 7, Denver metro area’s skyrocketing cost of living, stagnate wage growth, and lack of affordable real estate has fueled an enormous housing crisis — overwhelming the state’s eviction courts.

Colorado Center on Law and Policy (CCLP), which has spent decades advocating for tenant rights, warns that an eviction crisis is underway in the Denver region.

ABC Denver 7 said, “27 percent of all civil cases filed in Colorado in 2017 were evictions, which represents 45,000 cases.” In Denver alone, eviction cases accounted for nearly 18 percent (8,000 eviction cases) of all evictions across the state. Arapahoe County, the third-most populated county outside of Denver, experienced the most significant number of eviction cases at nearly 22 percent (10,000 eviction cases) in 2017.

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Jack Regenbogen, attorney and policy advocate for the Colorado center on Law and Policy, told ABC Denver 7 that most tenants are underrepresented in eviction court cases. In return, this has led to more evictions forcing tenants out onto the streets. He says about 90 percent of landlords are represented by legal counsel during an eviction process, but less than one percent of tenants have legal assistance.

“Traditionally, Colorado has been a very friendly state towards landlords. We really need our policymakers to begin investing meaningful resources to address this issue,” said adds.

ABC Denver 7 indicates that more than 50 percent of Coloradans are renting, and as court dockets continue to expand with evictions in 2018, the crisis is far from over.

According to the Denver Metro Association of Realtors (DMAR) May housing trends report, the average cost of a single-family home in the Denver metro area edged up, as it hit $543,059 in April. More and more homes are listing in the range between $500,000 to $750,000 than all of the price ranges below $500,000 combined. A spokesman from DMAR said homes priced between $500,000 and $749,000, is now considered the “new norm.”

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“This demonstrates home buyer demand remains robust,” said Steve Danyliw, Chairman of the DMAR Market Trends Committee. “As new listings poured into the market, buyers that were waiting for them quickly gobbled them up, driving the average days on market down to 20 days.”

Danyliw, further said housing activity remains stable, but increasing interest rates could have an eventual impact on the real estate market.

Evidence continues to build that housing affordability is getting worse, particularly for everyday Americans. Colorado is the latest example of consumers physically tapping out, as they can no longer afford soaring real estate/rent prices – which is now overwhelming state courts in Denver. 

Source: ZeroHedge