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Denver area sees 20% drop in unsold-home inventory
For Immediate Release On: 9/10/2008
For Further Information, Please Contact:
John Rebchook - Rocky Mountain News at rebchookj@RockyMountainNews.com
Relevant Info on the Web: http://www.rockymountainnews.com/news/2008/sep/10/fewer-unsold-homes-available/
The number of unsold homes in the Denver area plunged by 20 percent in August from a year earlier, the largest percentage drop in five years.
There were 24,648 unsold homes on the market last month, compared with 30,827 in August 2007, according to reports released Tuesday based on Metrolist data.
"This is very positive news," said Larry McGee, principal of the Berkshire Group. "A declining inventory eventually indicates that housing prices will rise."
But that's not the case yet.
Both the median and average prices of single-family homes sold last month showed double-digit percentage drops.
The average price of a single-family home was $284,531, down nearly 14 percent from $329,783 in August 2007.
And the median price of a single-family home was $225,000, down nearly 13 percent from $257,500 in August 2007.
"Clearly, we are not at the end of the influx of foreclosed homes entering the market. But in my mind, we are getting back to a normal market where we are going to be seeing a standard inventory of 22,000 to 26,000 homes available each month," said independent broker Gary Bauer.
McGee's analysis of the data found that 15 percent of all the single-family homes sales in August were for homes priced at $100,000 or less, while they accounted for 5 percent of the sales a year earlier.
McGee said an increasing number of investors are buying homes priced from $50,000 to $100,000 and are paying cash or making large down payments so they can rent them for a profit.
"That's also a good thing, because it's taking a lot of these lower-end properties off the market," McGee said.
Sarah J. Hays, a broker with Metro Brokers/Colorado Investors Real Estate Services, said she knows many homeowners who want to sell their homes and move up, but they don't want to compete with all the foreclosed homes on the market.
"They do not want to jump into this market," Hays said. "They either can't or aren't willing to take the loss on their current homes. I tell some people they would be better off renting their home until the market recovers. But some people don't want to be a landlord."
Bauer said the recent bailout of mortgage giants Fannie Mae and Freddie Mac might cause an influx of first-time buyers for the rest of the year.
Mortgage rates have fallen since the announcement Sunday, but Bauer said there is no guarantee that trend will continue. Overall, Bauer said he thinks prices will be flat, or slightly down, for the remainder of the year.
He expects prices to rise next year, although there's a possibility they will fall slightly in downtown Denver because of continued construction.
National index of homes sales falls in July
Pending U.S. home sales fell more than expected in July as the housing market's struggles continued, an industry group said Tuesday.
The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell 3.2 percent to a reading of 86.5 from an upwardly revised June reading of 89.4.
The index was 6.8 percent below year-ago levels.
Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 88.6.
Lawrence Yun, the trade group's chief economist, forecasts U.S. home sales are on a pace to fall 11 percent from last year to just over 5 million in 2008.
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