Metro Denver Economic Snapshot - January '12

That light at the end of the tunnel may not be another train coming this way. For the Metro Denver real estate market that light may be the end to the darkness the area real estate market has experienced since the conclusion of 2005.

For the past two years sales activity has begun to stabilize. In 2010 there were 15,095 single family/attached unit sales across Metro Denver. In 2011 that number was 15,350.

Comparing 2010 to 2011 for single family homes, here are some end-of-the year numbers: Active Listings – 4,533 vs. 2,482 (45% fewer listings); Absorption Rate – 153 days (5.0 months) vs. 82 days (2.7 months). (The Absorption Rate is the time it would take for the market to absorb itself assuming the sales rate stayed the same and no new inventory came into the market.) Based on these numbers, homes were selling at a quicker pace in 2011 than in 2010, and at the end of the year there was less available inventory.

Home mortgage rates continued at historic lows throughout 2011, with the traditional thirty-year fixed rate loan vacillating around 4%. New home builders took advantage of the reduced inventory of resale homes and began to build spec inventory; something that hasn’t happened for the past few years as lenders have been wary of providing financing on homes that don’t yet have a buyer in hand. Look for this element of the local real estate market to continue to expand in 2012 as builders develop land they purchased at rock-bottom prices.

In the past, corporate relocation was an important aspect of the Metro Denver real estate market. Local companies would search across the country (world) for qualified individuals to fill local positions. For the last few years those positions (if there were any) were filled with qualified individuals who were already living here. Look for that to continue as the cost associated with relocating individuals and their families has become economically prohibitive for many companies.

Below is an overview of sales activity for the past two years for single family homes in the various Metro Denver areas, courtesy of Metro List the Denver Metro MLS.