A Peek Into the 2019 Denver Real Estate Market

Since 2013, property values in the Denver Metro Area have been growing at an incredible pace. However, toward the end of 2018, the market softened. One of the most popular questions we receive is, “will housing prices finally come down in 2019?”  This is our attempt to answer this very question.

Let’s start by taking a look at the following charts produced by Realty Trends, LLC, a full-service real estate brokerage that specializes in neighborhood level real estate analysis.  Check us out at www.realtytrends.com. If you want to get regular reports on particular neighborhoods real estate trends, please contact your Realty Trends Realtor so that they can sign you up for your free neighborhood newsletter(s).  We have over 15 different reports for each neighborhood.

The absorption Rate is a good indicator, so to reflect supply and demand in a balanced market, we should have four to six months of supply; however, in 2018 the overall number is 1.85 which is higher than 2017 but lower than 2016. It is the second lowest in last five years. So, does this mean we are going to have another strong this seller’s year like first seven month in 2018? Hopefully the following chart will give us some insight into 2019.

To answer this question let‘s look at monthly absorption rates over the last two years

The charts indicate for the first seven months, the 2018 absorption rate is lower than it was in 2017; however, within the last five months, the absorption rate got longer and longer. Now, let’s take a look at what is going on here. Is it because we had more listings or is it because fewer homes were sold? To answer this, we will first have to examine the new listing numbers over the last five months of 2018.

Looking closely at the numbers, we know that in last five months of 2018 we had 1,354 more new listings than we did in 2017. We must then look at how many we sold in last five months of 2018.

In last five months of 2017, we sold total of 30,919 homes and in 2018, we sold a total of 27,724 homes which is a difference of 3,195. So, although we had more listings in last five month, the bigger reason that we are seeing this slow-down is simply that we have sold fewer homes. Apparently, buyers decided to be less active in the later part of 2018 compared to 2017. You might ask why? Although I am not 100% sure, if I had to guess, it is because of the uncertainty of interest rates. So, does this mean we are switching to buyer’s market in the second half of year? The truth is most likely no, since our absorption rate was still at 1.86, 2.45, 2.30, 2.28 and 2.02 ,respectively, over the last five months, indicating we are still in a seller’s market. With this in mind, a better question to ask is, Are we transitioning toward a more balanced market? To answer that, let me share with you how we correctly called the transition to the seller’s market in 2012. One of my Realtors, Mindy Milligan, was my client at that time and I told her and her husband in 2012 to hurry up and buy their next home because the market would change soon. Sure enough, many realtors started to realize the market change in the early part of 2013 and the rest is history. Here is how we did it in a simpler form:

The chart shows median days on the market. If you pay close attention, Days on Market starts to get shorter in August 2011 when compared to 2010, and the trends continued in 2012.

The Days on Market are getting shorter and shorter, especially when you put it in the context of previous years. Now, let’s take a look at the current market.

Based on the chart above, you can tell the median days on the market have been getting longer and longer since July and August. In general, we believe that the "strong seller’s market" has been softening and we'll realize a more balanced market soon. Or will we? The answer is no, no one can be sure because there are too many factors that we can’t control and we need more time to follow the trends. That is why we generate these reports every month for our realtors to keep public updated on the latest trends. So we encourage all to keep checking back with us on regular basis to stay informed on the market in your area. Regardless, the trends indicate that we're still in the middle of a strong seller’s market. Colorado's population growth was 1.4% in 2018 compared to the national average of is 0.7%.  Additionally, over the past several years the new home buyers were very qualified buyers due to the competition in the strong seller's market requiring extra up front efforts on their prequalification process. So as a result we don’t see a price reduction anywhere on the horizon. In fact, we agree with some experts who predict we are going to see another six to seven percent appreciation this year. But we believe, for those with keen eye, you will see a few more bargains and opportunities.

If you have any questions about real estate or need help with buying or selling your home(s), please fee to give us a call for you no obligation consultation. We have built a strong team to meet all your real estate needs and look forward to speaking with you soon.