Market statistics for August are now out, and as I do every month, I've culled through the numbers to provide this latest snapshot of what things look like in the Denver housing market.
From a raw data standpoint, it's not pretty. Overall inventory is now up 14.4% from a year ago, the fifth straight month where we've had more homes for sale on a year-over-year basis after nearly three years of steadily declining inventory.The absorption rate held steady at 9.03 months, up 80% from when the tax credits expired in April but well below the 12 months of inventory we see on a national level.
And there are just over five active listings for each home under contract, which means in the most basic sense sellers are competing with five other sellers for each buyer writing a contract.
Of course, there is some good news, too, although you have to go a little deeper to find it. The overall number of homes that went under contract in August - about 2,800 - is right in line with sales activity from August of 2008. The numbers only look soft because this year's data is being compared to last year's data, and at this time last year the tax credit was driving a red-hot market, especially at the entry level.
We also saw a new report showing the overall number of completed short sales is up 48% from one year earlier, a clear sign that banks are finally looking for ways to liquidate inventory without the full tab brought on by a foreclosure.
30-year fixed rates remain in the 4's and unemployment is mostly holding steady in Colorado.
Overall, it's not a great market, but it's not as horrible as the headlines are making it out to be. If you are a seller, the negativity in the headlines is going to affect you. Nothing good is going to be reported for the next few months, and so buyers are likely to remain in ultra-cautious mode.
For buyers, however, there is some opportunity. The combination of low rates, ample inventory and negative headlines should be empowering and put you in a better negotiating position. And if you believe that things are going to get better at some point economically, you've got about a 90 day window to play the very negative headlines to your advantage.
By year end, when we stop comparing our sales numbers to the artificially charged data from a year ago, the data will look better (even if the market is the same) and the headlines will start to get more optimistic. Of course, in reality, the market is not much different than it was in 2008, except that interest rates are lower. It's the perception that's different, and perceptions make all the difference.
