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Home Prices Rise In November
· December 6, 2016
November home prices rise to a record for this time of year.
DMAR releases November report.
Trump presidency could be good for housing, despite rising rates.
A historic snapshot of the Denver-area housing market. Source: DMAR
Denver-area home prices rose more than 11 percent in November from November 2015, according to a report released on Monday by the Denver Metro Association of Realtors.
The average price of all homes sold topped $400,000 for the first time in a November, shows the DMAR report.
The average sales price of all homes was $405,262, up 11.39 percent from $363,818 a year earlier.
The average home price was even 1.9 percent higher than the average price of $397,778 in October.
The median, or middle, price of all homes sold last month showed a similar trend.
The median price of all homes was $350,00, 11.15 percent higher than $314,900 in November 2015.
There were 4,047 home sales last month, a 9.7 percent pop from the 3,689 sales in November 2015.
However, the market did experience an expected seasonal slowdown.
Sales were down 15.35 percent from October, when 4,781 homes closed.
However, to put that into perspective, the month-to-month percentage drop in November 2015 was almost twice as big, with closings dropping 29.4 percent from October of last year.
There are a number of well-known reasons why Denver’s housing market remains so robust, said Steve Danyliw, chairman of the DMAR Market Trends Committee, and a Denver real estate agent.
“Obviously, in the Front Range, collectively, we are still seeing positive net migration and a healthy and diversified economy,” Danyliw said
Also, the market last month benefitted from sunny skies and warm weather in November.
“We had pretty good weather and good weather helps home sales,” Danyliw said.
A snapshot of housing activity. Source: DMAR.
“I remember speaking to a Realtor in Calgary a few years ago, and he said this time of the year home sales just come to a halt. They don’t sell many homes in the winter in much of Canada.”
Taking a broader, macro-look at the market, the question on the minds of many Realtors and others is how long the strong market will last, as well as the impact President-elect Donald Trump’s administration will have on the housing market, according Danyliw.
“Having a real estate developer in the White House may bring positive things for both buyers, sellers and Realtors alike,” Danyliw said.
However, mortgage interest rates already have risen about a half of a percentage point, topping 4 percent.
Rising interest rates could make it even more difficult for first-time home buyers to acquire a home, especially in a market like Denver, where prices have been far outpacing the inflation rate and wage growth.
“We already have seen an increase in interest rates and some are calling this part of the ‘Trump Bump,’” Danyliw said.
Also on a national level, he noted that the Dodd-Frank Wall Street Reform and Construction Act, “which brought us the Consumer Financial Protection Bureau, looks to be in the crosshairs for repeal, or, more likely, a significant re-work,” under the Trump administration.
In addition, Fannie Mae and Freddie Mac may transition into completely privatize organizations, instead of government-sponsored enterprises, he noted.
Meanwhile, in the Denver area, double-digit price appreciation and rising rates makes it especially tough on first-time home buyers, he said.
“While rising prices have been great for homeowners, it is really not sustainable for a healthy market that is in balance between buyers and the sellers,” Danyliw said.
Indeed, he hopes legislatures next year tackle the construction defect rules, so developers will once again “start building the entry-level condos that so many Millennials want,” rather than high-priced apartments, he said.
The low supply of homes, especially for homes priced below $350,000, has driven up prices, he noted.
There were 5,565 active listings on the market last month, a 2 percent drop from a year 5,683 a year earlier. However, the record low for a November occurred in 2014, when there were only 5,420 homes on the market.
A look at median home prices. Source: DMAR.
Listings were down 17.32 percent from 6,731 in October.
Danyliw recently experienced the lack of supply first hand, when he listed a Richmond-built home in Centennial for just under $315,000.
“Within six hours we had nine showings and received two offers above the asking price,” he said.
The home was placed under contract at $325,000.
Speaking of under contracts, for the entire market, there were 4,050 of them in November, a 1.6 percent increase from 3,987 a year earlier, but a 16.42 percent drop from 4,835 in October.
The market also was tighter last month than in November 2015, as far as months of inventory.
There was a 1.47 months of inventory for single-family homes last month, a 27 percent drop from the 1.92 MOI in November 2015.
The luxury market of homes that sold for $1 million or more, once again, was much stronger than the overall market, as far as percentage gains.
Some 102 luxury single-family homes and condos traded hands last month, a 61.9 percent jump from 63 in November 2015.
The highest priced single-family home sold in November was $7 million for a 5-bedroom, 6-bathroom, 4,626-square-foot home in Cherry Creek North.
A look at average home prices. Source: DMAR.
The highest priced condo sold was $2.875 million for a 5,403-square-foot unit in Boulder.
“Luxury home sellers had a lot to be thankful for in November, even though sales of single-family homes priced over $1 million was down about two percent from October,” said Jill Schafer, a DMAR Market Trends Committee Member and Metro Denver real estate agent.
There were 97 luxury single-family home sales last month, a 102 percent increase from 48 a year earlier.
The months of inventory of luxury single-family homes has dropped by half from November 2015, when there was 7.5 month of inventory of unsold luxury home “We are getting closer to a balanced market between homebuyers and sellers which is five to six months of inventory,” Schafer noted.
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