By Dr Denver H. Bubble
The mainstream media is slowing coming on board with our predictions that we have been making since starting this blog at the beginning of the year. In the Denver Post last week, an article called “Chill taking hold in metro Denver’s housing market” talked about the how buyers are pulling back from the housing market.
The inventory of single-family homes and condominiums in August continued their monthly streak of rising. It increased almost 8% from July ’18 and up 12% from last year. In typically years this inventory is steady from July to August. This month it set of record for an increase. The supply of housing inventory is now up to 8,288 homes and we predict this number to increase in September. This is still below the historical average for listing in August of 17,020.
Buyers are dropping out in droves. Single-family sales in August dropped about 7.5% from July and are down almost 10% year over year. Condominiums sales dropped 5% and are down a staggering 15.6% from last August.
The prices cuts are ramping up as well. According to our friend Steve Danyliw, chairman of the DMAR Market Trends Committee, roughly 30% of sellers lowered their listing price to try and entice buyers. This is causing pricing pressure that we are seeing show up in the median prices for sold homes. Median prices of a single-family home sold in August was down 1.1% from July to $445,000. Days on the market increased by almost 10% to 23 days.
Mortgage rates increase are forcing buyers to tighten their belts, mortgage volume was down 4.5% compared to August 2017. With mortgage rates looked to increase another 50 basis points, this is another headwind for buyers in the market and should put additional pricing pressure.
We are seeing the major trends showing signs of a slowdown in the metro Denver real estate market. Inventory supply is increasing, sales are dropping, mortgage rates are increasing and this is causing a price correction. How big of correction it is tough to say, but it is safe to say that we are at the start of the correction.