Over the course of the past eighteen months, the Federal Government implemented the Homeowner Tax Credit Program. The Federal Reserve lowered the Federal Funds Rate for member banks to borrow funds to nearly zero percent. Home mortgage interest rates have fallen to the lowest level in more than fifty years. Now, members of the banking industry are taking a sabbatical by not foreclosing on homes. All of these factors were/are designed to stabilize and stimulate the housing industry. Despite all these efforts, the housing market continues to quietly drift along.
There have been spurts of activity. The Broomfield/Westminster real estate market was UP in sales activity at the end of June/2010 as compared to the end of June/2009 for single family homes (+4%), but down for attached units (-7%). But those numbers have adjusted since the Homeowner Tax Credit Program ended in late April/2010. Through September/2010, single family home sales are down 12% Y.T.D. compared to Y.T.D. 2009; and are comparable for attached units. Thus, the Broomfield/Westminster real estate market hasn’t sustained itself in relation to single family home sales.
One of the best indicators of real estate market activity is the time it takes for the market to absorb itself. A healthy real estate market is thought to be around six months of available inventory. That time frame provides buyers with an adequate selection of homes and sellers with a reasonable amount of time to sell. The “absorption rate” for the Broomfield/Westminster real estate market has been relatively stable for most of 2010. Through September/2010, the absorption rate stands at 166 days for single family homes and 204 days for attached units. This compares to 114 days for single family homes and 165 days for attached units through September/2009. As we enter the fall and winter, the absorption rate should remain around the same level as both inventory levels and sales dwindle.
The question now becomes, “What’s next?” What magic elixir can the Federal Government and banking community pull out of their proverbial hat? The answer isn’t putting more lipstick on the pig, because you still have a pig. The answer always comes back to one four-letter word; the word that drives the economy and fosters the housing industry. That word is “jobs”. Jobs are the Holy Grail; the path to redemption; the pot of gold at the end of the rainbow. Without them, you have a stagnant economy, which naturally leads to a declining housing market.
Click here for a brief overview of the absorption rates for single family homes and attached units in the Broomfield/Westminster areas through September/2010. Thanks to MetroList, the metro Denver MLS, for all their magic numbers.
Click here for a downloadable PDF.
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