The January 2019 reports from REColorado (the local association) and the Colorado Association of Realtors (statewide association) indicate that sales activity in January was weak across the board. The report form RE Colorado, indicates a -5.8% drop in the Y-O-Y median sale price in Denver County for the month of January. This report combines attached and detached homes.
The Colorado Association of Realtors breaks out single family detached homes from town homes/condos separately. Their report showed the median price for single family homes down, by -1.1% The median sale price for condo/town homes is down by a whopping -12.8% Y-O-Y in January!!!!
Is the next real estate apocalypse at hand?
Probably not quite yet, but the exhibited trend is disconcerting. As I’ve said before, slowing is certainly afoot. These latest indicators may show that the market is perhaps more precarious than previously thought. On the other hand, the small sample sizes, typical of winter months, could be making the declines appear more alarming on a percentage basis than skewing
The drops are most certainly in response to the stock market fluctuations of late 2018, combined with unfavorable interest rate trends leading up to those market declines. These element certainly were felt on the ground in December when reports for market participants indicated it was more quiet than usual on most fronts.
As January came, many Sellers listed properties to try and cash out at the top – new listings increased by 24.8%, which added to the boost in supply from previous months to result in total active listing showing a 64.6% increase from January 2019 compared to January 2018. In fact the total number of active listings in January, 1,565, was not too far below the 2017 peak of 1,788 active listings in July. Despite the increase in supply, closing were down by -12.2%.
The question in the coming months will be – how strong will buyer interest be as the market grapples with the boosted supply? If the trend over the past year holds up, buyer interest would appear to be weakening, which is not good, and could result in a broader correction that may come quicker and may be more significant than previously anticipated.
Anecdotally, my buyer traffic increased significantly in January as buyers – mostly young couples – took notice of the potential for some market corrections. Unfortunately, upon seeing the quality of the available listings out there and the current state of pricing for good quality properties (high), many of them quickly retreated and put their searches on hold.
The challenge for Denver, which may become more acute as the broader economy slows, is that pricing is currently so high, that, despite ample interest in home ownership, the ability of that potential buyer population to pay current prices is significantly diminished.