Buyer Demand Continues to Soar

I received the December REColorado report for the 7 county metro area last week and here is what I learned-

• Buyers and sellers closed on 4,136 properties last month, a big increase of 18% from December 2018 and even a 2.2% increase from December 2017. But, we had even more closings in 2015 and 2016 by a small margin.
• Attached homes saw a 22.8% sales increase year over year.
• Detached homes saw a 16.1% sales increase year over year.
• We had 2,366 homeowners list their homes for sale last month as brand new listings. This was an increase of 9.2% from December 2018 and a 6.3% increase from December 2017.
• This was the 2nd highest amount of new listings in December we have seen in the last 5 years.
• Buyers placed 3,269 properties under contract last month. This was a big increase of 13.5% versus December 2018 and a 15.9% increase from 2 Decembers ago. 

• The average sales price last month for both detached and attached homes was $475,596, an increase of 5.7% from December 2018 and a 9.1% increase from December 2017. We saw more appreciation in 2019 than 2018.
• The average sales price for attached homes was $371,289, a 8.7% increase from December 2018.
• The average sales price for detached homes was $519,135, a 5.4% increase from December 2018.
• The median sales price for both property types was $415k, an increase of 5.1% from December 2018.
• The median sales price for attached homes was $305k, a 3.5% price increase year over year.
• The median sales price for detached homes was $445k, a 4.7% price increase from December 2018.
• The sales to list price ratio in December was 98.9% up from 98.7% in December 2018; but down from 99.3% in December 2017. 

• We ended the year with 4,398 properties for sale, which was down 16% from December 2018 when we had 5,249 properties for sale. But, we ended 2017 with just 3,468 properties for sale, which was our record low.
• This gives us 1.06 months of inventory. WOW!
• Average CDOM dropped by 8 days year over year to 47 days. And we ended 2017 at 49 days.
• Median CDOM dropped by 1 day year over year to 26 days. We ended 2017 at 16 days though.
• Median CDOM exceeded 30 days last month at every price point > $400k. Median CDOM was at it's lowest on homes priced in the $300k's. This surprised me!

 

Year End Data-

• 65,266 homeowners listed their homes for sale last year, the highest amount in the last 5 years. But, in the last 6 months of the year we only saw 28,467 new listings or 43% of the total.
• 56,267 properties were placed under contract last year, the highest amount in the last 5 years barely beating out 2015. In the last 6 months 26,594 properties went under contract or about 47% of the total.
• 54,395 properties closed last year, an increase of 4.3% from 2018. This was the 2nd highest amount of sales in the last 5 years as in 2017 we saw 54,863 properties close.
• Average sold price for both property types year to date only rose 3.2% last year to $478,443. Year to date smooths out the ups and downs of monthly data.
• Median sold price for both property types year to date rose by 2.7% to $415,900.

 

My Observations and Thoughts-

• Under contracts this December was a record high for the last 5 years. In fact, the 3,269 under contracts was 12.6% higher than our second best year in 2016.
• More properties closed in December than in November by nearly 6%. I think this could be because many closings got delayed as we had a big snowstorm 2 days before Thanksgiving and the last day for closings in November was the day before Thanksgiving since Thanksgiving came so late.
• This also made months of inventory for December lower and November higher than the numbers should have been.
• I was very surprised to see the number of new listings increase year over year after dropping for 2 previous months.
• Median home prices rose pretty much as I expected at 5.1% year over year, down from nearly 8% the last 2 years.

 

My Predictions for 2020-

 

As we saw in 2019 mortgage rates will have a big impact on demand and especially prices once again in 2020. If mortgage rates remain below 4% as predicted by Fannie, Freddie, the Mortgage Bankers Association, and Realtor.com then I expect 2020 to look more like 2018 than 2019.

• I expect we will sell more than 55,000 properties this year, a new record high I believe.
• I believe we will see median prices rise 6-7% from December 2019 to December 2020. We could see bigger price increases (say 9% to 10%) in the 2nd quarter versus the 2nd quarter of 2019 as prices barely rose year over year in the first 6 months of 2019. Then, I expect price growth to taper off in the second half of the year.
• I am concerned that we won't see enough new listings this year and thus active inventory will drop this year.
• Thus, I expect we will see more bidding wars in 2020 than we did last year. But, hopefully not as many as we saw from 2015-2018.
• Maybe this will bring out more new listings and more inventory; but probably not soon enough. Why? Buyer demand begins increasing sharply NOW and so many homeowners don't think to list their homes until June or later. Ask your homeowners this question-would you sell your home in April or May while the kids are still in school if you could make an extra $10k or $15k?

 

A concern I have for late summer and fall is the Presidential election and how this may impact the decision making of people on both sides of the aisle. Could it keep people from selling their home or buying a home?