As we enter 2013, the Metro Denver economic news remains positive, with 2012 year over year averages improving in almost every category over 2011 and for the preceding 3 years. The 2013 real estate market outlook remains strong, but external factors could change the picture. The so-called fiscal cliff came and went, with more congressional grandstanding to follow in the near future. Such elected incompetence can certainly effect the real estate market, but most of the population seems uninterested in the Washington Beltway shenanigans. Recent indications from the Federal Reserve Bank are that interest rates will now be pegged to benchmarks that reflect an improving economy. The lack of resale inventory will affect sales in the first part of 2013, as one cannot sell what one does not have. REALTORS® will begin to work hard to create inventory, aggressively encouraging owners to sell as opposed to waiting until owners become self-motivated, and builders are becoming more aggressive in their activities.
The current real estate/economic picture in Denver will remain positive for the individual home seller in prices under $500,000, but remains very stressful for buyers, especially in the price ranges under the $500,000 mark. Sellers are often receiving multiple offers, and many properties are receiving bids in excess of asking price, often in the first few days. There is growing confidence that the Denver area has a strengthening real estate market. Resale inventory remains historically low, while closed sales are exceeding previous year levels each and every month. With 2012 showing continuing improvement over last year, interest rates remaining at historic lows, and the local employment picture improving, the housing picture in Denver looks brighter than any time in the past 5 years.
While it is reasonable to expect that average and median prices will experience the normal seasonal decline entering 2013, the Metro Denver market should ended 2012 poised for a strong 2013. Home builders will continue their increasingly aggressive increase in starts, with building permits continuing well ahead of last year. A quick review of the Band Charts seen in The Berkshire Group’s Newsletter show that most of the Denver area market is firmly in a Sellers market. But, there are still certain market segments that are not enjoying the current strong market. The high end remains slow, and most likely will remain so in the first part of 2013, but look for continuing improvement in 2013. Buyers looking in the under $400,000 price range will continue to face very stiff competition from investors looking to buy and hold for rental income. In short, the Metro Denver housing market enters 2013 stronger than at any time in the past 5 years, with the potential of a complete recovery in 2013, although noticeable appreciation in the + $500,000 price ranges may not occur until 2014 or later.
Key Economic Statistics:
New Home Permits (Metro Denver):
New Home Permits issued through November, 2012: 5240
New Home Permits issued through October, 2011: 3330
This is a 57% Year to Date increase at the end of November over the same period in 2011.
(NOTE: Metro Denver multifamily permits issued through November increased by 169% over November Year-to-Date 2011.)
Denver Area Residential Resale Statistics:
2012 vs. 2011 Year End:
Single Family Sales: 37,164 vs 31,437 Average Sales Price: $304,178 vs $279,858
Condo Sales: 9,135 vs 7,950 Average Sales Price: $179,616 vs $158,141
Average Single Family Home Sales Statistics for December, 2012 compared to December, 2011:
Year Prices % of Change Days on Market Inventory
2012 $315,451 +14.46% 75 6,366
2011 $275,610 107 8,854
Average Condo Sales Statistics for December, 2012 compared to December, 2011:
Year Prices % of Change Days on Market Inventory
2012 $188,867 +12.29% 67 1,340
2011 $166,420 106 2,139
Total Combined Homes placed under Contract in December, 2012 = 3,090 vs. 2,832 for December, 2011
Total Combined Closed (SOLD) Homes in December 2012 = 3,400 vs. 3,156 for December, 2011
Note: The average and median prices continue to trend up, the volume of sales is up, and the available inventory remains historically low, signifying considerable improvement in the Metro Denver market. This position shows little change from November. It is interesting to note that December average sales prices exceeded Novembers.
- Source: Metrolist, Inc.
Employment Statistics for the Denver-Aurora Metropolitan Statistical Area for November, 2012:
Year Labor Force Employed Unemployed Rate
2012 1,405,125 1,300,863 104,262 7.4%
2011 1,411,149 1,302,290 108,859 7.7%
Consider that as the economy improves, more people will return to the job market, so the number of unemployed may actually increase. In October, the State of Colorado unemployment was 7.5%.
- Source: Colorado Department of Labor-the information is the most recent provided
Average National Mortgage Rates as of January 17, 2013
30 Year 15 Year 5/1 ARM 1 Year ARM
3.38% 2.66% 2.67% 2.57%
Mortgage interest rates decreased slightly in the past month, with the mortgage market continuing to offer extremely low rates for qualified buyers. Many homeowners are taking this opportunity to refinance. Mortgage rates will remain low at least through the first quarter of 2013, with actions by the Federal Reserve Bank and the Euro crises acting to restrain interest rates in general. Upward change is on the horizon as the economy improves!
All rates include a 0.4 % to 0.7% discount point. Rates quoted by any lender may not reflect momentary changes. Rates in the Denver area may be slightly higher or lower with a given lender at a given time. All rates noted in this report apply to the best qualified borrowers.
- Source: Freddie Mac National Website
*The Pulse is a review of key economic statistics that affect the Metropolitan Denver Area real estate market. The Pulse is offered monthly as part of The Berkshire Group’s Monthly Update, and is current based on the information offered by the credited sources. The database is the 7 county Metropolitan Denver SMSA:Denver, Adams, Arapahoe, Douglas, Broomfield, Jefferson, Elbert Counties. All information shown is the most recent available from the quoted sources.