What a week it's been in the markets... we certainly are living through historic times.While I cannot tell you what the stock market is going to do next (or the Federal Government, for that matter), I can tell you what's happening in the Denver real estate market.
Here's the short summary:
The low end of the market, up to $250k, continues to sizzle. As of this morning, the absorption rate for homes in this price range is just 3.69 months, meaning that if no new homes were to come on the market the existing inventory of homes in this price range would be completely extinguished in less than four months.
Of course, most of this activity is driven by foreclosures. Over 80% of all Colorado foreclosures have been at price points of $240,000 or below. This is where values have fallen the most, this is where most of the bargains are and this is where investors and first-time buyers are still crawling over each other to find and purchase bargains.
The bottom of the market remains HOT!
The middle of the market, from $250 - $400k, is doing okay, but it's slowing. Market time has increased to nearly 10 months over the past 30 days... this is where we begin to see the impact of the massive stock market / 401k losses that have affected so many.
From $400 - $600k, things are really slowing. The inventory of homes in this price range has surged to 21 months over the past 30 days, an increase of nine months market time in just 30 days. People in this bracket are not buying homes right now. Sellers need to realize this and decide if they really need to sell. If you do, cut your price. If you don't, pull your home off the market and save yourself the frustration.
Above $600,000, it's just plain dead.
There's no denying the stock market and global financial drama of the past few weeks has paralyzed buyers in our market and throughout the country, except at the lowest price points, where demand remains exceptionally strong.
My take on this is that, while everyone needs a home, not everyone needs a $600,000 home. Builders are telling us that "small is the new big", and that going forward, most builders are shifting their focus to smaller, more affordable, "greener" homes.
These are dramatic changes going on, and it really pays to study the nuances of what is happening in this market. There are great opportunities to be had, but there are also mistakes that will be made, and this is no time to be guessing your way through a very choppy and segmented market.
If you would like me to email you my latest chart showing activity in all price ranges of the Denver MLS, simply drop me a note and I'll be glad to get the data right out to you.
