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Denver’s Housing Market Practically Froze Over In September

A report from the Denver Post in Colorado. “Home sales in the metro Denver area fell precipitously in September, forcing sellers to cut their asking prices and pushing up the inventory of properties available for sale at an unprecedented rate, according to a monthly update from the Denver Metro Association of Realtors.”

“‘The housing inventory and home price adjustments are normal and expected,’ said Steve Danyliw, chairman of the DMAR Market Trends Committee. ‘What’s not normal? Sales of single-family homes priced over $500,000 dropping 33 percent from August to September. For those sellers, that’s real turbulence.'”

“Metro Denver’s housing market has shown signs of cooling since early summer. But it practically froze over in September, and that meant sellers faced a bumpy ride, especially owners of more expensive properties.”

“The number of single-family homes sold in September, across all price ranges, dropped 30.5 percent from August and is down 21.4 percent compared to September 2017. Condo sales fell a dramatic 42.9 percent on the month and are down 17.3 percent year-over-year. The inventory of homes and condos available for sale at the end of September shot up to 8,807, an increase of 7.04 percent from August and 16.1 percent compared to a year ago.”

From the Gazette. “Colorado Springs’ red-hot housing market wasn’t quite so crazy last month, as home sales slowed, inventory rose to a two-year high and prices increased, a Pikes Peak Association of Realtors report shows. The single-family home market is ‘just stabilizing a little bit — not so frenzied,’ said Donna Major, board chairwoman for the Realtors Association.”

“Home sales totaled 1,273 last month, a nearly 16 percent year-over-year drop and the seventh straight monthly decline. Major said multiple offers for homes aren’t quite as common as they were early in the year. The number of homes listed for sale climbed to 2,449 in September, 14.2 percent higher than the same month last year and the most since August 2016.”

“‘It has that feel of, we’re not in that desperate situation,’ Major added Tuesday. ‘People are starting to be a little more cautious, and buyers are starting to be … a little more, maybe, a little more picky about what they’re buying and trying not to overpay or feel like they’re overpaying.'”

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This Post Has 44 Comments

  1. ‘What’s not normal? Sales of single-family homes priced over $500,000 dropping 33 percent from August to September. For those sellers, that’s real turbulence’

    As long as we’re talking about what’s normal or not, frenzied shack buying/multiple offers aren’t normal. But in a mania all sorts of absurd activity is seen by some as normal. And those old houses that cost $40,000 to build ain’t worth $500,000 Steve.

    1. Yes indeed, if an open house looks like a cocktail party probably not a good time to buy. If there are 5 other offers on the house you might not actually “win” by buying it. The herd instinct is powerful in primates

      1. I was at an open house at this nice old Victorian in Colorado’s Old North End when some homeless dude snuck in and took a dump in the upstairs bathroom. The realtor was not amused.

  2. Ran into the wife of a guy I know who is a realtor in the Springs. He’s a stand-up guy and is one of the very few ethical realtors in the biz. Of course I asked her about the market, and she said he expects the Colorado Springs housing market to taper, but says right now inventory is still low and bidding wars are common. Lots of California equity locusts are moving in and making all-cash deals.

    Will see if the contagion from Denver reaches Colorado Springs and Manitou Springs – from all indications, the housing market here is still firing on all cylinders.

      1. That isn’t clear yet, supply is way way up, but the houses on offer are smaller and $/sqft is up as well. More supply for sure should tend to reduce prices.

  3. ‘forcing sellers to cut their asking prices and pushing up the inventory of properties available for sale at an unprecedented rate’

    Almost all these markets where sellers are a slashin’, the days on market are still around 20. Would you cut the price of your shack after three weeks? I wouldn’t even cut the price of a candy bar in such a short time. So something is BS.

    1. “I wouldn’t even cut the price of a candy bar in such a short time.”

      Unless you thought prices were going to drop considerably lower in a short time frame and they had an expiration date. No one here in Denver things its a good time to buy, even those that were trying to get me to buy early this summer. Many stories of angry homeowners saying there neighbor just sold their house for less than they could have sold it for just a few months ago, and how it is messing up the comps. We are only down about 2% from peak, but people are getting rightfully scared, especially because it appears to be a national problem now. I literally heard 3 people tell me in the last 7 days they are thinking about selling now and renting for a year or two while things cool off. I haven’t heard this since 2006-2007. These were people that told me I was crazy for thinking there was a bubble last year.

      1. ” We are only down about 2% from peak, but people are getting rightfully scared, especially because it appears to be a national problem now.”

        Must be people who are leveraged up to their eye teeth.

        1. Well if you are new to the market and have 10% down and it costs 6% to transact a 2% decline in prices indicated that you have lost something like 80% of the equity you thought you had. Leverage can be a bitch

    2. Who knows how many times it has been put on the market in the last year? We only know it averages 20 days on the market for the last time it was on the MLS, right? Stuff seems to go off and back on a lot lately.

  4. Anecdotally, judging by acquaintances and neighbors, it seems that many homeowners (or mortgage-payers, rather) in Colorado Springs are in debt up to their eyeballs, with virtually no savings on hand for any kind of emergency or unexpected financial hit. Almost everybody seems to be driving a new, $40,000 SUV or pick-up on six-year financing and taking expensive vacations rather than paying down debt. I don’t know if that’s the norm, but it doesn’t bode well if their equity starts tanking.

    1. I don’t live in Colorado, but in the last year or so have seen a lot more Range Rovers and Porsche Cayennes on the street than would seem warranted by incomes in my area.

      Also, a lot more vehicles painted a virtuous white. It reminds me of the late 1990s, when silver was the hip color, ostensibly because it had a high-tech connotation, or even the late 1980s, when a sleek, black sedan was in, because Gordon Gekko would drive something like that.

      1. White vehicles make sense here because of the summer temps. California has considered banning black vehicles because the air conditioners have to work a lot harder in a dark car. So they’re being practical, not virtue-signaling.

        1. I like white because I like driving cars, not waxing them. White paint can get old and oxidized and it still looks good enough for most purposes.

        2. “White vehicles make sense…”

          White vehicle are involved in the least number of traffic accidents according to a recent web search whereas the darker colors more so because they tend to blend with the scenery at a glance.

      2. I rent in S. Aurora near the Southlands mall and on my daily commute to/from the Anschutz medical campus I see incredible numbers of new or relatively new $40k+ SUVs and pickups.

        As someone who originally hails from the east coast, the number of pickups is particularly astounding, given both 1. the list price for these vehicles and 2. their gas consumption. While maybe ~1/5-1/8 I see on the road are work/company trucks, the rest are pretty obviously commuter vehicles.

        I sincerely don’t know how they afford it. I put $14k down on a lightly used CX5 that cost $23k before tax and I still feel like I exceeded my budget (sort of wish I had gotten a hatchback instead).The salesman even tried to tell me that I might not be able to get a loan with how much I wanted to put down… the times we live in.

  6. The single-family home market is ‘just stabilizing a little bit — not so frenzied,’ said Donna Major, board chairwoman for the Realtors Association.”

    Donna, whom is also a realtor for remax, I think we are past the “don’t spook the heard” stage. If your gonna double up as a realtor and a NAR rep, do us all a favor and work on your pro RE fluff. Call it as it is, a snowball in motion. Get out while you can!

    1. I’m thinking the NAR needs to hire the former Iraqi Information Minister, Baghdad Bob, to be their new spokesman. He has so much more credibility than Lawrence Yun or the other Bozos the REIC trots out with their relentlessly upbeat spin, dissembling, and obfuscation while the data indicates a bursting bubble.

      2. Bob is busy, he got hired at the Pentagon, they gave him a new name, he is now called Bob. He is busy explaining what a success Afghanistan will become any year now.

  8. I think Zillow has finally jumped the shark. Here we have a house in a market temp of “cold” followed by “Zillow predicts Lake Forest home values will rise 4.5% next year”

    Then you have a Zestimate $20k higher than the listing price. Even weirder, their one year forecast is based off of the Zestimate instead of the list price for some reason, which has the one year estimate at almost $30k higher than the list price. All of these mistakes paint a rosier picture than reality. I find RedFin has a much better grasp on the data than Zillow.

    https://www.zillow.com/homes/for_sale/Lake-Oswego-OR/48308264_zpid/5504_rid/490408-640408_price/1995-2605_mp/45.45712,-122.631541,45.364207,-122.755824_rect/12_zm/

  10. Someone posted these RedFin charts and Seattle looks like a crash is in motion, though LA seems to be holding. The 2nd chart shows housing demand dropping in the neighborhood of 20%

      1. Click on his “charts” which is a link to Redfin.

        From that chart, here is maybe the most interesting look at the shift which really kicked in during July. I suspect the September data is going to be worse.
        https://imgur.com/eKlAzfz

  12. Treasuries hit a multi-year high today. I expect mortgage rates to be above 5% before the end of the year (currently around 4.7%). On a 400k mortgage that is $567 more per month than the 3.3% rates of 2013. The sqeeze is tightening while inventory is rising nationally.

    1. 5 at the end of the year, but what about March/April when the summer buying season begins? It could hit 5.2-5.5 percent in the same month people are doing their taxes and realizing what they can and can’t deduct with their shack/mortgage/HELOC.

    2. If this keeps up, even if prices decline to a sane level, I still won’t be able to afford to buy due to the interest rates!!

      1. I bought my current place with a 5.50% conforming mortgage back in 3/2003, and I paid it off on 10/2011. Of course I had to forsake new cars and vacations making it difficult to live with my other half, but eventually she came around. Her co-workers envy her these days.

      2. “If this keeps up, even if prices decline to a sane level, I still won’t be able to afford to buy due to the interest rates!!”

        That’s exactly where we want to be. It will drive down prices even more, and at that point it will make sense to stretch a little to buy something. Then as things get stable and rates start to drop life is good and the economy booms with real productivity and people can actually afford to buy stuff with money they earned and were able to keep after paying their bills instead of debt.

      3. Well it is a far better position to buy during high interest rate period. Your monthly nut will be about the same as the low interest rate/ high price era, but in the future if interest rates go down again you can refi and lower your payment. If you bought at historic low rates, refi can’t lower your payment.

  13. “The number of single-family homes sold in September, across all price ranges, dropped 30.5 percent from August and is down 21.4 percent compared to September 2017. Condo sales fell a dramatic 42.9 percent on the month and are down 17.3 percent year-over-year. The inventory of homes and condos available for sale at the end of September shot up to 8,807, an increase of 7.04 percent from August and 16.1 percent compared to a year ago.”

    – KEEP BUILDING BOYZ

  14. 7 1/2 year highs on interest rates….add in gas prices at multi year highs….joe six pack will be forced to hold off on beer to buy that house or take his car to tour the open houses.

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