Here is the opening paragraph from today's real estate article in the Denver Post:
"The metro Denver housing market continued its rally in June. The number of homes put under contract last month increased 22.5% from a year ago - the second consecutive month that homes under contract showed large increases over 2010."
The article then goes on to quote a number of Realtors and other happy-talk professionals, painting a picture of recovery and momentum for everyone with four walls and a roof over their heads.
Not so fast.
There's one simple, obvious, huge omission from this article, and it's the fact that the two large and lucrative tax credits being offered to first-time buyers and move-up buyers came off the table April 30, 2010. With the incentive to buy gone, sales crashed through the floor in May and June of last year. Therefore, comparing this year to last year is a totally distorted comparison, and the Post real estate writer should know this.
Although I would love it if the facts matched the headline, there's only one sector of the market that is performing strongly, and it is the entry level.
At the mid-level and higher price points, fear is keeping buyers out of the market while sellers outnumber buyers by a large margin.
Lack of inventory is the dominant theme today, especially at the lower price points. Overall, there are nearly 21% fewer listings on the market today and than a year ago. But below $250,000, there are 37% fewer listings on the market today than one year ago. There's simply nothing out there for buyers at the entry level.
While inventory is also down (although not by nearly as much) at the higher price points, there are no buyers looking at luxury homes. In fact, only 28 contracts were written on $1 million homes last month in the entire metro area.
I suppose the happy headlines in the Denver Post will help buyer confidence, but when it comes to making huge financial decisions, I'd rather base them on facts instead of poor reporting.