Denver Market Turning ... or Not - Vida Properties

Denver Market Turning … or Not

Is the Denver market turning? Not only has the weather cooled off (finally) but so has the hot real estate market. This is seasonal pattern that is natural to Denver so it is not really the best indicator of whether the market has plateaued or much worse, if we are anywhere close to pre-2008 market conditions. Inventory has increased but not to the point where it has turned it away from a sellers’ market… not by a long shot. However, we are coming up on eight years since the downturn of 2008 and five years since the recovery started in late 2011. Is that an indicator that the market will shift? What about the election results and impact of the new Trump administration? That should mean something right?

There are way too many statistics and metrics to consider to begin to understand whether we will be facing a housing bubble anytime soon. Instead I wanted to focus on Denver’s local market and one particular metric which I’ve brought up before in previous blogs and articles: the months of inventory. One sure thing that would bring property values down and that may get to a situation of foreclosures would be having a surplus inventory and no buyers. In general we hear about a balanced market having five to six months inventory. To figure out the months inventory, you divide the number of homes for sale by the number of homes sold in that same month.

The chart below shows the history of months of inventory (per Metrolist) for the Denver Metro counties of Denver, Adams, Arapahoe, Jefferson and Douglas from July of 2008 through October of 2016.

Denver Months Inventory (2008-2016)

Do you see how the months of inventory were way above six months between late 2009 to just 2012? We all know that problems started after 2006 but it took a while before we started seeing the effect in housing. Then it was just under three years of a buyer’s market and thousands of homes not selling. In 2013 we started seeing the market turn the other way and months of inventory was no more than three months then and has even under two months since the spring of 2014. The number of homes for sale has stayed under 10,000 since then as well. We all know that buyers have gotten into loans with lower interest rates and subprime loans are history. The Denver area has also seen a huge population growth, low unemployment rates and huge demand for housing. Inventory would need to multiply at least six-fold to get to concerning levels. That’s exactly what happened between mid-2008 and and mid-2009. Yikes. As far as the Trump story line, let’s say deregulation takes hold and credit is loosened. Will loan terms get to subprime standards? Will consumers take the bait and take on riskier loans? It would take years before the impact is felt even if things turned south for everyone. Researchers have, in fact, concluded that presidential administration hardly have an impact on the housing market cycle. The simplest thing to remember is take care of your own business. Don’t live beyond your means and prepare for the next recession. It will come some day (some say 2022). Below are some cool links to do more of your own research. I’m talking about the nerdy type of “cool”. Enjoy.

Looking to buy or sell your home. You can contact me by email or call 720-253-8513.

Rogelio Rodriguez

720-253-8513

rogelio@vidabroker.com

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