The Denver Market: 2018 Statistics Predictive of 2019 Success?
By Renee Cohen
We’re just starting the new year, and we’re all wondering what the real estate market has in store for us. Let’s take a look at Metrolist statistics related to Inventory, List Price/Sale Price Ratios and Days on Market throughout 2018 to evaluate how we’re positioned for the start of 2019.
With respect to inventory, in January 2018 there were 7559 homes available for purchase on the market. That number climbed to the high for the year in September at 13,418 and finished the year at 9254 in December; this number is a 22% increase from the low point in January and a 31% decrease from September’s peak.
List to Sale Price Ratios
How have list-price to sale-price ratios fared over the course of the year? The average LP/SP ratio started 2018 at 99.2% in January. Overall, sellers commanded strong LP/SP ratios throughout the year with the average fluctuating between 100.6% in Q2 when the market was most active and 98.6% on the low end in Q4; however, the average steadily decreased between April and November, which correlates with the slowing pace of the market in the second half of the year.
Days on Market
Days on Market (DOM) is a third metric worth noting. DOM in January 2018 was 55 days on average. The market experienced the lowest DOM of the year at 32 in July before steadily increasing to the highest DOM of the year at 57 in December.
What do these statistics portray and what are the implications for buyers and sellers now? According to the numbers, even with the slowing we’ve seen in recent months, the market is still strong; inventory is increasing, properties are selling yet not quite so quickly, and sellers still command solid sale-to-original-list prices when they sell. With the longer days on market, price reductions are emerging – something unheard of during the frenzied spring and summer months of 2018.
If you’re a seller in this market, it’s imperative that you understand the metrics in your specific neighborhood and that you price your property at market value - or even slightly under - to ensure you generate interest from the buyer pool. It seems counter-intuitive, this pricing below market value thing, but buyers are out there and they know value when they see it; they will compete when they feel the price justifies the value, and they will pass when they feel the property is even slightly over-priced. Conversely, if you’re a buyer in this market you must know your limits - exactly how far you’re willing to go emotionally and financially if you end up in a competing offer situation – and be willing to walk away if necessary. While multiple-offer situations are not currently as prevalent as they were in the spring of last year, in a competitive offer situation you have little to no leverage as a buyer and you must negotiate with your limits in mind; stretching those limits too far can have disastrous consequences both emotionally and financially.
With the rumblings of “are we headed into a recession” occurring in conversations, it will be interesting to watch how the market plays out in 2019. Stay tuned!
Renee Cohen is a Colorado Realtor with a passion for helping her clients navigate the emotional process of buying and selling real estate. She loves educating her clients about the market, advocating on their behalf, and helping them make informed decisions. Reputable. Reliable. Remarkable. Real Estate. Contact Renee to assist you with your real estate needs!