The frost is on the pumpkin

On Cinco de Mayo of 2012 we wrote about the onset of a major shift in our real estate market’s direction (see article). During the past 17 months we have witnessed an extraordinary surge in prices and activity, and a stunning decrease in inventory.  June of this year we set the all time record for highest median price ($509,007) and in July we sold more homes (428) than any other month in the history of central Denver real estate (see map).  At the same time, our available inventory was down about 50% this summer from 2011 levels.

The market remains a seller’s market as you can see from the absorption rate graph below that shows how many months it would take to consume the current available inventory if homes sold at the same rate at which they have sold for the past twelve months.  The graph is divided by price point.  According to the National Association of Realtors, a six month supply is a balanced market; less than that is a seller’s market.

 

Across all price points, with the exception of million dollar plus homes, we have a strong seller’s market.  Our current buyers can attest to this as well!

 We believe that this Halloween will mark the beginning of a soft rebound to a more balanced market for three reasons.  First, we are seeing a slight decrease in appreciation from 12% to 11% — we can’t sustain these double digit numbers forever.  Second, most mortgage brokers agree that interest rates are on their way up — we’ve already seen them escalate slightly.  Third, as the graph below shows, our inventory this month will most likely surpass last year’s October inventory — the first time for any month since that fateful cinco de mayo weekend in 2012.

Right now is a great time for buyers to purchase as interest rates are historically low, inventory is slightly increasing, and prices are continuing to appreciate at double digit rates.  Right now is also a great time to sell as interest rates and inventory are still historically  low, and we’ve surpassed prices set at the height of the market in 2007.

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