By Dr Denver H. Bubble
Another month, another record high in prices here in the metro Denver area. It appears that nothing can slow down this rise in home prices. There is a lot of to breakdown in the June DMAR report, and it even had us reaching back to last month’s report as well. Month over month, prices in the Denver Metro area had an impressive increase given the weakness in recent months, rising 2.62% for median and 2.07% for average residential prices. Year over year, the pace of the housing prices rose with the average residential prices rising 3.36%, and the median residential prices rising 2.38% from May 2018 to May 2019. For the ever important single-family homes, month over month average prices rose 0.71% to $555,482 and median 2.17% to $470,000.
We were off on our call, last month predicting a 1% to 2% year over year increase in average single-family prices homes for May ‘19. We came to this forecast by using the past few months price trends, our experience, and then using the May DMAR report to make a projection on the May numbers. At our high-end forecast, we came up with May ‘19 single-family average price being $547,000. We did this by using the May ’18 number provided in the $536,154 and increasing it 2% and then round it up about $100.
DMAR May '19 May '18 Discrepancies
We were a little shocked to see the average selling price for May ’19 at $555,482 and a stated increase of 2.90%. We dug into the June DMAR and looked at the same chart as last month. The almost one-year-old data price for May '18 changed by $4,000 to $539,825. We could understand if the previous month numbers changed to delays in reporting (which it did, by the way), but for year old data to change? This is odd.
DMAR June '19 May '18 Discrepancies
In terms of local news for the metro Denver real estate market, we already know that the real estate lobby completely comprised the Denver Post. As most of see, the Denver Post only reports what the real estate lobby wants them to report We try to provide an objective view of the overall state of the local Denver real estate market, but without accurate data, it is impossible to know the true state of the market. If we used the old price data, it would have been a 3.60% increase year over year, not 2.90%. Is DMAR deliberately suppressing the prices increases to lure buyers in to keep this bubble growing? We don’t know, but we want some answers on the disconnects we detected.
Moving on to the rest of the report, that we should take with a grain of salt, housing inventory is up 26.80% to 8,891 from April to May. The 8,891 homes available were still far below the historical norm of 16,007, showing the marketing inventory is still tight relative to history, but it is the best it has been in years in terms of selection. If we look at the year over year inventory statistics, inventory is up 38.12%, which is a good sign for buyers at the peak of the important spring buying season.
Sold homes were up almost 8% month over month, but down 6% year over year. Buyers, like moths to a flame, are flying to the market, even with prices still rising. We think the drop in mortgage interest rates this month is having a large positive effect on home prices, acting as a critical support column. The 10-year Treasury is approaching 2% and is a key lending indicator in the mortgage market.
Homes are sitting for longer with the average home sitting on the market for 24 days up 26.32% year over year, but down 14.29% from April.
We don’t have price forecast this for June ’19 due to the discrepancies we highlight in the DMAR reports. One of the crucial ingredients of any bubble is fraud, and we can’t say for sure, but we may have found a sign of it in in one of the pillars of the Denver real estate community. It is up to Denver Metro Association of Realtors to rebuild this trust.