Homes, especially lower-priced homes, are a hot commodity in the Denver area, which has forced their prices up. The military-dependent economy of the Colorado Springs, Colo., area makes a more stable, if precarious, market, say in-the-know real estate professionals in the two markets who shared their insights with Inman News.
Because of rising rental prices, decades-low rental vacancies, and many residents in the first-time homebuyer bracket and a low inventory overall, Denver is experiencing an incredibly high demand for homes in the sub-$250,000 price range, said Stacie Staub, a Denver-area real estate agent with Live Urban Real Estate, in a Q-and-A with Inman News.
Demand has pushed prices up in this category by 10 percent on a year-over-year basis, and led to very low inventory and tremendously short selling times, Staub said.
This first-time-buyer free-for-all is not the case 70 miles south on I-25 in Colorado Springs, said Kelley Barcus, chief financial officer of Saddletree Homes. Though most of the $1 million-plus home market is sluggish and carrying high inventory, the homes that represent a family’s second or third upgrade are going fastest.
Unlike Denver, said Barcus, there are very few first-time homebuyers.
In both cities, sales prices (3.71 percent in Denver and 1 percent in Colorado Springs) and the numbers of homes sold (8.29 percent in Denver, 1 percent in Colorado Springs) are rising.
On Wednesday, April 25, Inman News is offering Agent Reboot, a one-day tech tune-up event for Denver-area real estate agents. The event runs from 8 a.m. to 3:30 p.m. at the Crowne Plaza DIA in Denver (more details).
Q: Which types of properties are selling fastest in your market area?
BARCUS: We predominately build semi-custom new homes. Pre-sales make up 60 percent of what we sell, and spec homes make up 40 percent. The prices are starting around $399,000 and range to $600,000.
STAUB: For the last year in Denver the starter price range of $1 to $250,000 has outperformed the market in terms of number of sales. Because the single-family and condo inventory has dropped in this price point, buyers are making multiple offers and offering over the list price for a chance to buy the home. This is causing prices to rise by up to 10 percent year over year in this price range.
Q: Which types of properties are selling slowest in your market area?
BARCUS: Homes priced over $600,000.
Real Estate Market Stats: Denver
|# closed home sales (2011):||31,437|
|# closed home sales (2010):||30,777|
|% change closed sales (2010-11):||2.1%|
|# closed home sales (latest month):||3,475|
|% change closed sales (recent month in 2012 vs. same month in 2011):||8.29%|
|Median sales price (most recently month available in 2012):||$284,035|
|% change sales price (recent month in 2012 vs. same month in 2011):||3.71%|
Sources: Metrolist CO MLS. Stacie Staub compiled and prepared the market data presented here.
Q: How are the demographics of buyers and sellers changing in your market area?
BARCUS: Colorado Springs is unique in that its demography is primarily active-duty and retired military. This demography rarely changes because there are five large military installations in the area. Fifty percent of homebuyers are related to the military or the Department of Defense.
Q: What is the level of activity among first-time buyers in your market area?
BARCUS: We are in the second and third-time move-up bracket. We rarely see first-time homebuyers in our area; the exception would be a military buyer using their Veterans Affairs loan.
STAUB: First-time buyers are very active in the Denver market, especially as vacancy in rental units is at the lowest level in decades. Rent rates are rising, and it’s getting really tough for renters to find a nice, affordable place to lease, so they are turning to homeownership as a better alternative. The challenge is Denver’s low inventory, especially in the under $250,000 range. There is a lot of competition for these homes, and they are selling unbelievably fast.
Q: What is the level of activity in the luxury market in your area?
BARCUS: The luxury market was diminished in 2006 and still has not rebounded. A large portion of the million-dollar inventory is still sitting without much movement. There are several years of luxury inventory to be sold.
Q: What are the recent trends with home prices, sales and inventory?
BARCUS: Inventory has decreased, prices are still flat and sales are flat. The year-to-year numbers are similar.
Real Estate Market Stats: Colorado Springs, Colo.
|# closed home sales (2011):||9,475|
|# closed home sales (2010):||9,397|
|% change closed sales (2010-11):||1%|
|# closed home sales (latest month):||1919|
|# closed home sales (for recent month):||1899|
|% change closed sales (recent month in 2012 vs. same month in 2011):||1%|
|Median sales price (most recently month available in 2012):||$209,230|
|% change sales price (recent month in 2012 vs. same month in 2011):||2%|
|% share of distressed properties (most recent month available):||10%|
|% share of cash buyers (February 2012):||1%|
Source: Pikes Peak MLS. Data prepared and compiled by Kelley Barcus.
Q: What is the current state of the distressed property market in your area?
BARCUS: Distressed properties are down 20 percent from last year. There is not much rumor of shadow inventory entering the market.
Q: What worries you most about the current state of the market?
BARCUS: The downsizing of military or Department of Defense would greatly impact the sales.
STAUB: Low inventory becomes a bigger issue for us everyday. With no homes to show to move-up buyers, the starter market is very tight.
Q: What represents a sign of optimism and opportunity for the real estate market?
BARCUS: The community needs to create private-sector jobs before optimism will return.
Q: What is the overall economic health in your market area?
BARCUS: It is weak due to dependency on military and Department of Defense jobs.