Welcome to the scariest month of the year, and boy did the Denver housing bulls get some scary information from the October DMAR report that was released last week. Metro Denver home prices fell in September 2019 from August 2019.
August to September 2019 Residential Housing Price Trends
Month over month median and average prices Metro Denver home prices fell in September. In the Denver Metro area, median prices fell 2.35% and were down 0.56% for average residential prices. The monthly fall in overall residential prices was to be expected as prices tend to weaken following the summer months. Single-family homes sold price were at $535,032, up 0.23% from August 2019.
September 2018 to September 2019 Residential Housing Trends
Year over year, the metro Denver housing markets continued to show strength. Median prices rose 3.75% and were up 6.06% for average residential prices. Year over year price increase are currently running above our forecast.
September 2019 Metro Denver Housing Inventory
Housing inventory is down 0.68% to 9,286 from August to September. However, if we look at the year over year inventory statistics, inventory is up 5.44%. This increase, while respectable is still lower than the increase we have seen all year. The 9,286 homes available were still far below the historical norm of 16,000, showing the marketing inventory is still tight relative to Denver’s inventory history. The metro Denver housing market ended September with 2.04 months of single-family and 2.12 months of condominiums. This shortage of inventory is still leading the market to be a seller’s market.
We have also noticed a bubble worthy trends in the metro Denver condo market. Below are the trends in active listings (the yellow bars) in the single-family homes. It is following a normal inventory trend of rising sharply after March, the start of the spring selling season, and decreasing following May and June, the end of the spring selling season.
The Denver condo market, on the other hand is performing bizarrely with regards to inventory. Starting in March of this year, condos Active listing continued to rise all year, hitting a 2019 high in September. In a normal market, active listings should be dropped after the spring selling season, this could be one of the earliest signs of the bubble beginning to deflate. We will keep a close eye on the active listing of Denver condos in the months to come.
September 2019 Metro Denver Sold Homes
Sold homes were down a staggering 20.22% month over month, and up 2.22% month over month, which was expected as sales tend to drop off as the new school year approaches. In August, 37% of sold properties had price reductions prior to receiving an offer, this is compared to last year when only 31% had a price reduction.
September 2019 Metro Denver Days On Market
Homes are sitting for longer with the average home on the market for 33 days up 22.22% year over year, 6.45% from August. Homes sitting for longer are another warning sign of a cooling market.
Denver Mortgage Outlook
The 30-year fixed mortgage rates at 3.72% continue to hover near the 52-week lows of 3.60%, well below the 52-week high of 4.99%. The low mortgages rates will continue to boost Denver’s home prices in the short run. Data from the Institute for Supply Management data showed U.S. factory activity declined for the second straight month in September and hit a 10-year low, which has pushed rates lower over the last week. Wall Street traders are pricing in a 90% chance of one more rate cut from the Federal Reserve in 2019. The slowing industrial output combined with the near-certain rate cut should push rates down past the 52 week low, and lower mortgage rates will be bullish for Denver home prices in 2020.
As we highlighted, during last month post on DMAR, low unemployment will also be bullish for Denver home prices. The US unemployment rate decreased to 3.5 percent in September 2019 from 3.7 percent in the previous month. If the unemployment rates rises, we should see a lagged effect on home prices in the metro Denver area.
Dr. Denver Housing Bubble’s Outlook
One theme that we see this month is it is a tale of two housing markets in Denver. Below the median home price is still on fire, but the higher in price the slower homes are selling. The two most popular price ranges for single-family homes the $300K-$399K and $400K-$499K with 916 and 898 sold homes in September respectively have very little inventory. The $300K-$399K price range has only 1.05 months of inventory, while the $$400K-$499K has 1.62 months. On the other hand, the $1 million-plus price has 6.63 months of inventory, which is a balanced market, moving towards a buyer market if the trends continue.
We get a lotta questions about the Denver housing bubble from readers regarding what course of action they should do if they are waiting to buy a house in the metro Denver area, mainly via email, Twitter or FaceBook. We always appreciate the questions and would love to start a discussion here in the comments as well. Very high-level advice, if you are buying a house in the metro Denver area it depends the price range. A good rule of thumb is below $500K, it is a good bet to buy a home, but over $500K it may make more sense to wait until the Denver housing bubble begins to deflate. As you can see from the inventory levels in the high end, they are firmly in an equal market moving to buyers market.
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