Buyers are in the catbird seat again this month, that is, if they can get a mortgage. Prices take a slide but credit is still tight even though rates are the best they've been in awhile.
Figures for the Denver real estate market for November 2008 show steep declines in prices, in number of homes sold versus last month and last year at this time, and number of homes currently on the market. Area economic experts predict that prices will continue to fall, possibly into 2010. But metro Denver is still in a better position economically than most.
Average single family home prices dropped the most, a whopping 18.55% from November 2007. Condos and townhomes fared better, experiencing only a 2.37% drop in average price from this time last year. The single family median sold price dropped below $200,000 to $195,000 for the first time since the 1990s. The average price was $242,557.
The average price for condos or townhomes was $161,615 compared to $165,533 in November 2007, while the median price was $130,000 compared to $139,000 in November last year, a drop of 6.48%.
The total number of homes sold in November 2008 as compared to November 2007 dropped 16.14%. But the biggest drop came when comparing the drop from October to November 2007, indicating a seasonal slide, to the drop from October to November 2008. The drop in 2007 was 9.51% while in 2008 it was 31.81%! Denver, like other major cities, has taken a hit in light of the general economic picture, particularly tightening credit.
But overall the year to date home sales number through November is trending only slightly under 2007 (4.22%), a good sign for the future, especially considering the local economy which is showing a slowdown in job hires rather than the steep drops seen elsewhere. And home foreclosures, which have been a drag on the Denver real estate market for the last few years, dropped 2% for the first ten months of this year compared to the same period last year. New building continues to slow down. In 2008 only half the number of homes were built than in 2007, reflecting the general economic slowdown.
But there are some sweet spots for sellers too. As I've said before, good homes in good shape in good neighborhoods sell quickly, even in this slow market. And if you're looking for a good deal on a foreclosure - either pre- (short sale) or post (bank owned), you may be competing with several other offers forcing you to pay above asking price if you really want the home. For either resale or distressed sale homes, the basic rules of economics still apply. Good houses in great shape in desirable locations command the attention of multiple buyers in good times and bad. What's in short supply these days is the total number of buyers. But take note that some may be looking at the very same house you want.
A question asked by many of my buyers is "If I buy now, what about declining values? Will my home be worth less when it comes time to sell it?" The answer varies depending on how long you stay in your new home.
On average buyers stay in their homes about 5 years before selling according to independent real estate broker, Gary Bauer. (Bauer issues a monthly market report used by the Denver dailies and is widely regarded in Denver real estate circles as a market expert.) In an April 2008 report in the Rocky Mountain News by Rob Reuteman, Bauer is quoted on the issue. He says, "If I bought my home a year ago for $200,000, and I had to sell for $180,000, I'd be upset. If I'm staying in the Denver market I take $180,000 and buy a house that would have cost me $200,000 a year ago. But I'd still have a little feeling that I really didn't do so well. If I were that individual five years ago, my average appreciation would be 39 percent. Would I be concerned about a 10 percent drop in price today? I don't think so. I would have bought it for $130,000 and sold it for $180,000."
The Denver Post has a very useful interactive map of home values across the metro area. You can look at values by neighborhood, discover whether values are rising or declining and much more. (The map hasn't been updated to include the third quarter 2008.)
Interest rates have dropped significantly in the last few days. Conventional loans were an astonishing 4.5% for a loan value of $300,000, and 4.625% for a loan value of $140,000; FHA loans of $140,000 were 5.000% and $300,000 were 5.000% for well-qualified buyers as of December 17, 2008, from our preferred lender, Rate One, The Mortgage People. Homes are much more affordable. Denver's economy is steadier than the rest of the nation, and while unemployment has risen to 5.7%, jobs are still expected to increase this year.
Denver's cost of living makes it an easy choice over higher cost areas like both coasts. According to CNN/Money.com it costs 51.1%% less to live in Denver than in San Jose; 43.8% less than in San Diego; 66.6% less than in San Francisco; and 12.9% less than Seattle. If you live in the east, it will cost 37.6% less than in Washington, D.C.; 32.8% less than in Boston; 101.9% less than in New York; 22% less than in Philadelphia.
For buyers coming from the south and the midwest, Denver could cost more. It costs 4.9% more in Denver than in Atlanta; 12.8% more than in Houston; 8% more than in Dallas; 8.3% more than in Dayton, Ohio; 5.2% more than in Rochester, MN, and 10% more than in Boise. But living in Denver still costs 10.7% less than in Chicago, 15.1% percent less than in Portland, and a whopping 49.3% less than in Los Angeles.
You'll need to do your due diligence to compare cost of living between your city and Denver at websites like Sperling's Best Places, Bank Rate or CNN/Money.
Having an Exclusive Buyers Agent to find the best buys will shore up your buying ability by representing your best interests - finding the best home at the lowest possible price, and saving you time and hassles. See client references. Phone numbers available upon request. Call Judith Clausen now at 303-587-3509 to help you find your next house.