Metro Denver Economic Snapshot - April '11

Real estate markets are normally evaluated based on three factors: past history, current conditions and future thinking. Past history is used by appraisers and Realtors to establish a sense of value. How much have properties sold for in a specific geographic area to establish value for a single entity i.e. a single-family home, attached unit, investment property, parcel of land, commercial building, etc. Current conditions provide insights into where the real estate market might be heading. Are there more properties for sale than there are buyers? i.e. a buyer’s market. Is the inventory of available properties less than the number of prospective buyers? i.e. a seller’s market. Are there a relatively equal number of buyers and sellers in the marketplace? i.e. a balanced market. Finally, what does the future look like for the local, regional and national real estate markets? Economists attempt to reach-out into the still unknown and spin their opinions based on two factors: past history and current conditions. This is what happened. This is what is happening. Therefore, this is what will happen. There are many people with “crystal balls” out there.

No “crystal balls” here; just some observations. The Metro Denver real estate market continues to languish. Although area homes have not experienced dramatic downward shifts in value (think Arizona, Florida and California), overall sales have continued to slide. For the first quarter of 2011, single-family sales are down 9% and attached unit sales are down 9% when compared to the first quarter of 2010. Please note this isn’t an “apples to apples” comparison. For those of us still retaining a few active brain cells, the first quarter of 2010 had the gift of the government’s Federal First-Time Homebuyer Tax Credit Program. No such gift is available this time around. An even more dramatic comparison exists when one looks at sales figures for 2005; the year Metro Denver sales activity peaked. For the first quarter of 2011, sales would be down 28% for single-family homes and 30% for attached units when compared to the first quarter of 2005. It will take many buyers and many sellers to reach that level of activity again.

Click here for some sold numbers for single-family homes for the Metro Denver real estate market. Information is courtesy of MetroList (the Denver Metro MLS).