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Denver Real Estate Market Report for August 2019

Anton Usaj

Denver Real Estate Market Report for August 2019

See below for our full report for August 2019 and please let us know if you have any questions. We email this market infographic report on the Denver Real Estate Market each month. To get on the email list, please reach out to info@usajrealty.com and request to be added.

Update on the Denver Housing Market

The price of homeownership in Denver increased yet again in August 2019 year-over-year but dipped slightly when comparing the numbers to July. The median sold price for a home in metro Denver for August was  $425,000, a 4.17 percent jump from August 2018 and a 1.16 percent decrease from July.

According to CREJ, “The median home price in Denver has increased from $219,900 to $446,600 from 2009 to 2019, this is an increase of 103% during a time in which weekly wages have grown from $850 to $1,090, or an increase of 28%.” Thus goes the story of increasingly difficult housing affordability in Denver. The median sale price of single-family home in August 2019 was $459,900, and the median sale price of a condo was $310,000.

Why do people think a recession is coming?

In short, the stock market has been all over the place, the bond-yield curve inverted (according to the Washington Post, “The yield curve has inverted before every U.S. recession since 1955, suggesting to some investors that an economic downturn is coming,”), U.S.-China trade war tensions, and Brexit disarray are prompting the predictions of a downturn.

If a recession hits, will housing prices go down?

Not necessarily. With national fears stoked of a predicted recession, the effects an economic decline would have on the housing market is definitively unknown at this point. Historically speaking, buyers and sellers have a reason to be optimistic: the triggers of this projected recession are not housing-related. Curbed cited a report that “only twice in the last five recessions—in 1990 and 2008—did home prices come down. In 1990, prices decreased by less than a percent. During the other three, prices actually went up.”

How is this time around different than the crash in 2007?

During the last recession, there was an influx of newly constructed homes available for sale. That has not been the case this time around. According to Curbed, the chaos of the last recession was actually triggered by the housing market collapse due in large part to poor lending standards. The tensions we have right now are not related directly to housing so it can be presumed it will affect housing indirectly as well.

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What are signs to watch for in Denver?

Two biggies are unemployment as well as supply and demand. Denver has incredible strong employment levels, which is a great sign for the health of the market and overall economy. Demand has been much higher than supply which has caused the cost of housing to skyrocket in the last decade. While we’ve had an increase in inventory so far in 2019 when compared to years past, it is still relatively low, especially for homes under $400,000. WalletHub recently compared 300 U.S. cities across 23 key indicators of housing-market attractiveness and economic strength. The data set ranges from median home-price appreciation to home sales turnover rate to job growth and Denver ranked 21st.

Months of Inventory

Inventory in Denver had been creeping up for 6 months straight for the first half of 2019, but did take a slight dip in July with 9,359 active listings and stayed almost the exact same in August with 9,350 active listings. We are still technically in a sellers’ market with 1.81 months of inventory across the board; yet sellers are receiving less multiple offers than years past, giving buyers more leverage to negotiate when submitting contracts.

If you are weighing the pros and cons of buying or selling this year, a Usaj Realty broker would be happy to assist you in expertly navigating the Denver market. Many factors go into deciding what could be right for your particular situation, so sitting down with an expert can be a great opportunity to discover the best route for you.

Key takeaways for August 2019 via DMAR:

Stats below include data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties

In the News: What’s Happening in Denver

More days on market and price drops, but Denver housing market still favors sellers

“It now takes nearly a month on average to sell a home in metro Denver and practically every new listing is followed by a price reduction.” – Denver Business Journal

New home construction keeps falling in metro Denver

“For the first time since the depths of the housing crash in 2009, the pace of new home construction in metro Denver has dropped for three consecutive quarters. The number of construction starts on new homes dropped 10.5 percent in the second quarter compared to the same period a year ago. That was mostly driven by a steep 17.6 percent drop in single-family home starts, according to counts maintained by Metrostudy, which tracks new home construction across the country.” – Denver Post

Increasing demand from renters for larger units

“As homeownership in Denver becomes increasingly more expensive, we expect demand for larger rental units to increase. This shift is likely to be driven by demographics and the overall cost of housing. In the Western United States, homeownership rates peaked at just under 65% in 2006. The homeownership rate declined significantly in the years following the Great Recession.” – CREJ

In the News: What’s Happening Nationally + Internationally

Banks are paying people to borrow money. That’s alarming news for the global economy.

“For Americans accustomed to paying 4 or 5 percent mortgage rates, let alone the double-digit figures consumers endured in the early 1980s, the new loan from Denmark’s Jyske Bank might seem inconceivable. The Danish lender last week started offering home buyers 10-year mortgages at an interest rate of -0.5 percent. That means borrowers over a decade will pay back a little less than the amount borrowed, not including one-time fees.” – The Washington Post

US 30-year bond yield falls to record low under 2% as global recession fears grow

“Traders across the board have pointed to a deterioration in U.S.-China trade relations as the catalyst for August’s dramatic stock and bond moves, including a 60-basis-point drop in the 10-year Treasury rate. But notwithstanding the latest barbs between the world two largest economies, Treasury demand remains strong and likely symptomatic of traders’ belief in a larger, more malignant downturn in the global economy and a secular decline in inflation.” – CNBC

Why aren’t more Millennials buying homes? A bunch don’t understand mortgages

“While the number of Millennial homeowners is rapidly increasing, a recent survey from LendEDU showed that 42% have yet to buy a house. In the survey that was taken by 1,000 people between the ages of 23 and 38, almost 90% of the non-homeowners responded that they aspire to homeownership. When asked how many years they were away from that goal, the largest portion, 65%, estimated it would be one to five years before they were homeowners. Their biggest reason for the delay: finances.” – HousingWire

Trump’s China tariffs are already hitting the housing industry

“As the administration continues to discuss levying new tariffs as part of its ongoing dispute with China, the escalating trade war is already touching many of the raw materials the housing industry depends on; the current 25 percent tariff on imported building material that went in effect in May has been called a “$2.5 billion tax on housing” by the National Association of Home Builders.” – Curbed

Is a recession coming? Here’s what that means for housing

“The short term impact to housing is less likely to be as reactive,” Javier Vivas, director of economic research at Realtor.com, says. “The impact of the last recession is fresh in our minds and can have a play in home buyer psychology. But barring weak fundamentals, housing tends to perform fairly well during recessions. Over-construction is largely what got us into trouble last recession, and we’ve experienced just the opposite since then.” – Curbed

Report for August 2019:

Read Denver Metro Association of Realtor’s full report on last month’s Real Estate trends and statistics in Denver here.

And as always, please let us know if you have any questions!

 

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