Douglas County Economic Snapshot - August '12

As late summer melds into early fall the Douglas County real estate market continues to remain positive both in the resale sector and new home construction. For the first time in several years we’re seeing a few new homes being built across the Front Range in the higher price ranges. These are mainly presales as lenders and builders are still wary of building spec inventory in a price range approaching and exceeding seven digits.

Through July/2012 Douglas County single family home sales are UP 23.20% when compared to through July/2011 (3,525 homes vs. 2,861 homes). Attached unit sales are UP 29.44%  for the same time periods (422 properties vs. 326 properties). The overall market is UP 24.69%.  When compared to 2005, when the metro Denver market peaked, single family home sales for the Douglas County market are down 14% through July of each year (3,525 homes vs. 4,098 homes).

Since 2005, the Douglas County real estate market has experienced a decline and then a period of stability. This is historically characteristic of real estate markets. They seem to drop off the edge of a cliff, regain their balance, and then claw their way back to the top. It’s a slow process, fraught with many sleepless nights on the part of buyers and sellers, not to mention Realtors, title people, inspectors, appraisers, builders, etc.

The Absorption Rate (the time it takes for the market to fully turn assuming the same rate of sales activity and no new inventory) for Douglas County continues to drop as available inventory remains at a low level and sales expand. The Absorption Rate for Douglas County at the end of July/2012 stood at 106 days. Compare this to the end of July/2011 (185 days) and July/2005 (133 days).  Active single family home listings in Douglas County at the end of July/2012 were down 29.48% compared to the end of July/2011 (1,763 homes vs. 2,500 homes) and down 31.70% when compared to the end of July/2005 (1,763 homes vs. 2,581 homes).
  
With this uptick in the Douglas County real estate market, where do we go from here?

Unless something dramatic happens in world affairs and the economy takes another shift south, look for the balance of 2012 and into 2013 to remain much the same as they are now. Available properties for sale will continue at historic lows as sales activity swallows-up the inventory at a pace at least equal to new inventory coming into the market. Look for home mortgage rates to continue to vacillate up and down slightly, but stay at a reasonable level. New home production builders see opportunity in the marketplace. As the inventory of platted lots dwindle, dirt work on new home subdivisions will once again be part of the landscape.

The Douglas County real estate market has not reached the point of a scarcity mentality where either there is (a) a plethora of listings and few buyers (a buyer’s market) or (b) a limited number of listings and an abundance of buyers (a seller’s market). For the next year, Douglas County should experience a balanced real estate market, where well-priced properties in good condition will sell in a reasonable amount of time.

There’s an old saying in real estate: “Price overcomes all objections.” Pricing continues to be one of the dominant elements in the real estate market as resale properties must now compete more with new construction.