Dwell Denver Market Update: Year-End Higher Inventory - It’s Not What You Think | 12.17.18

Описание: Denver’s Year End Higher Inventory: It’s Not What You Think

You’ve probably heard the statements that we, in the Denver Metro area, have the highest amount of housing inventory for sale right now than at this time last year.

In fact, it’s 28% higher in November 2018 than November of 2017. Uh oh!

If you’ve heard this (and who hasn’t?), you might be thinking one/more of the following:

our market is finally slowing down
we’re in a bubble and it’s going to pop
it’s because we’re on the verge of a recession

These are all understandable hypotheses, but they aren’t the reason (see my other blogs).

The short answer is that to all of these is that there are a striking lack of corroborating signs that point to any type of market-slowing-bubble-bursting-recession.

So what’s going on with our 28% higher inventory?

It’s a simple answer: this year’s market was just a bit different. In 2018 the market went up much higher, faster, and earlier than in any of the last previous years.

Here’s what typically happens.

For the last six years of our Extreme Sellers’ Market, we’ve had a fairly predictable seasonal shift in housing inventory. And it goes a little something like this:

Early Spring: a big wave of buyers comes in and buys up the inventory as quickly as it can come on the market, causing the prices to rise dramatically.
Summer/early Fall: That big wave of buyers leaves the market. There are still buyers on of course, but a small fraction of the big wave. Sellers still put homes on the market at a similar rate as spring, but since there are less buyers, inventory builds, and prices flatline.
Fall/Winter: there are very few buyers buying. Sellers tend also to put less homes on the market, but there’s a relative housing buildup. Prices fall and homes stay on the market quite a bit longer (but not back down to early year prices).

This year, it was different.

The big wave of buyers started in late January, nearly a month earlier than usual.

Why? We had an interest rate raise that probably scared people into earlier action, along with the rumors of the crazy Denver market.

Prices went up higher, faster, earlier, and actually started to flatline in May, versus June or July as in previous years.

But when the majority of buyers dropped out of the market either because they bought, or just decided to wait (buyer exhaustion is a thing) sellers continued to put homes on the market at a similar rate.

Here’s what makes this “28%” sound so crazy: last year we had the least amount of inventory of the Extreme Seller’s Market- 28% lower than today. It’s because we went from lowest inventory to highest inventory in 12 months.

And what’s the real number difference? 1,446 more houses on the market.

And here’s what’s crazy about how not-crazy this really is: if you take the average number of houses on the market over the last six Novembers, in 2018 we’re only about 100 houses over the average.

The thing about averages is that the smaller the number you’re dealing with, the larger the average impact even a small shift in those numbers appears.

That’s just not that much. This year, the higher-faster-earlier market burned out just a bit earlier to leave us with about 1400 more houses on than last year, and only 100 more than usual.

Merry Christmas and happy holidays. Go buy a house while they’re still cheap (until Jan).

#DwellDenver #RealEstateReallySimple