Mountain Suburbs Economic Snapshot - June '12

The term “global economy” has become part of the daily jargon as it relates to the ups and downs of the world’s various stock markets and the financial entities attempting to create some semblance of order to the world’s economy. Uncertainty appears to be the norm these days as Wall Street traders grapple with a market vacillating between bears and bulls, impacted by the doings across the pond and along the Pacific Rim.

The Mountain Suburbs real estate market continues to show signs of stability as sales activity has improved thus far this year when compared to the last few years. Through May/2012, single family home sales throughout the Mountain Suburbs are UP 34% compared to through May/2011 (281 vs. 210). The market is still down about 9% when compared to 2005, the benchmark year when sales activity peaked.

Through May/2012, the Absorption Rate for Mountain Suburbs single family homes stands at 248 days. The Absorption Rate is the length of time it would take for the market to sell the entire existing inventory, assuming no new listings came on the market and the rate of sales activity remained the same. The Absorption Rate at the end of May/2011 was 442 days. The Absorption Rate characteristically trends downward over the course of the year as sales activity increases during the spring and summer months. Look for that pattern to continue this year.

The lack of availability of resale properties has impacted the overall market. At the end of May/2011 there were 615 single family homes for sale in the Mountain Suburbs. That number at the end of May/2012 stood at 460; a 25% decrease in inventory. The result has been an increase in the number of showings, multiple buyer offers and homes selling in a shorter period of time. Home values have begun to trend up in some pocket areas across the Front Range as scarcity creates demand. This is an opportune time for home sellers considering a move to look seriously at entering the marketplace this late spring/summer.

Looking forward, it appears the Mountain Suburbs market will continue on a similar plain. The available inventory of resale homes will remain low. Home mortgage interest rates continue to hover below the four percent mark for the traditional thirty-year fixed rate loan. There are no indications the powers to be in Washington are going to do anything soon to upset the financial apple cart.

New home construction by production builders is reaching a point where “in-fill” lots are being built out, which means development of approved parcels will be their next path. Earth movers will once again be churning-up virgin land, and planning departments will dust off the cobwebs and begin sitting down with developers.

That light at the end of the tunnel, which for years was simply another train coming our way, now appears to be a gift of sunshine for the Mountain Suburbs real estate market and the Front Range. The market is still a few years away from mirroring 2005, but at least it is moving in a positive direction.

(Note: Sales statistics are from MetroList, the Denver area MLS.)