By Brandon Cornett | 8/16/12
© 2012, All rights reserved
Financial Bloggers Wanted
The Home Buying Institute is launching a second website called MetroDepth. It will offer in-depth real estate reporting at the local level. It’s a unique opportunity for financial journalists and real estate bloggers. View details
City Park Lake in Denver, Colorado. iStockphoto.
MetroDepth recently published a housing market report for Denver, Colorado. The report contains data relating to home prices, home sales, and other aspects of the local real estate market.
One interesting bit of data had to do with the ‘median age of inventory,’ a loose measurement of how long homes are staying on the market. At it turns out, Denver is a fast-moving market where homes are snapped up quickly.
Denver Homes are Selling Fast
Realtor.com recently published a ranking of real estate markets where homes appear to be selling quickly. The rankings were based on the ‘median age of inventory,’ which measures the number of days homes are listed on Realtor.com.
A low median age of inventory suggests a market where properties are selling quickly. A higher number indicates a slower market, where homes are listed for sale over a longer period before being sold (or otherwise taken off the market). The Realtor group looked at 146 metro areas to come up with their rankings. And according to MetroDepth:
“Denver had a median inventory age of 33 days, the second lowest of all 146 cities in the comparison group. Only Oakland had a lower median age of inventory.” -Source
This is good news for anyone who is planning to sell a home in Denver in the near future. It’s the kind of market where sellers might enjoy multiple offers, often for the full asking price.
On the other end of the spectrum are those cities where homes tend to stay on the market longer. This included various coastal cities in the Carolinas, as well as parts of Florida. Notable examples include Myrtle Beach, South Carolina (137 days) and Naples, Florida (131 days). Clearly, it’s harder to sell a home in those areas.
Prices are Rising Across the Metro Area
Given the level of demand in the Denver real estate market, it should come as no surprise that home prices are rising. According to the latest Case-Shiller/SP Home Price Index, prices in the metro area rose by 2.1% from April to May of this year. That was the most recent data available at the time of publication, due to the time lag in reporting.
Between May 2011 and May of 2012, prices rose by a healthy 3.7%.
Homeowners in Denver can probably expect to see gradual appreciation over the next year or so. Beyond that, it’s anyone’s guess. Economists from Zillow recently projected modest price gains for this metro area, through the second quarter of 2013.
How to Buy a House in a Fast-Moving Market
Homes are selling quickly in the Denver area. We’ve established that. But what does this mean for home buyers? What can a buyer do to prepare for such an active market? Here are some things you can do to be more competitive:
A serious buyer should get pre-approved by a mortgage lender before shopping for a home (with the obvious exception of cash buyers). This is where the lender reviews your credit, debt and income situation to determine whether or not you are qualified for a mortgage loan. They’ll also give you a maximum amount they are willing to lend. This allows you to narrow the field, in terms of price.
With a pre-approval letter in hand, sellers will take your offer seriously. Without such a letter, they might not give you the time of day. At least, not in a fast-moving real estate market like Denver.
Familiarize yourself with home prices in the area you are considering. If you’re shopping for a 2,000-square-foot home in a particular neighborhood, you should have a general idea what similar homes have sold for recently. This is especially important in a city like Denver, where homes are selling quickly. When you find a house you want to buy, you need to make a swift offer. Otherwise, another buyer could snatch it out from under you. Market awareness is the key to making a swift offer.
Don’t squabble over nickels and dimes. Denver is not a buyer’s market anymore. It used to be, in the immediate wake of the housing crash. But things have changed since then. Homeowners are not desperate anymore. They know they’re in a hot market where properties sell quickly. They know there are other buyers behind you, ready to make an offer (and possibly a stronger offer) on their homes. As a result, buyers need to make strong but realistic offers, and be prepared to negotiate upward if necessary.
Filed under Market Reports