When Will We Hit Bottom? How to Know When the Market Hits Bottom
Not only did the TODAY show rank Denver the #1 city in America for the real estate rebound, but there is much hard evidence that Denver is passed bottom (including the number of bids on every good property under $200K...some up to 37 offers!).
Explaining the Charts Below:
The National Association of Realtors defines a "balanced" market as having 6 months of inventory:
- Less than 6 months is a Seller's Market: homes are selling relatively quickly and there are more buyers chasing homes.
- More than 6 months is a Buyer's Market: homes are selling relatively slowly and there are too many homes on the market.
While Denver has been a Buyer's market the past several months, the inventory of homes on the market in Denver has been declining. This is not true in many regions of the country.
Denver is at about 5 months of inventory...1 month LESS than a balanced market, making it actually a Seller's Market according to NAR. I've actually experienced this writing offers for clients - if the house is well-priced in a good neighborhood, or well under market-value, it's almost guarenteed there will be a bid war between buyers. The home ends up selling for more than the asking price!
It's a mixed issue. Lower cost areas, such as Thornton, are seeing inventory move fast. Sellers (mainly banks) don't have to wait long for offers. Thornton's average price in the last year was around $250,000 and the average MOI (months of inventory) was about 3 months. Greenwood Village, on the other end of the scale, had about 13 MOI and an average price of about $1.4 million. Sellers are suffering there. The city of Denver is about in the middle.
The second CHART below compares REO's (lender owned) homes to regular homes regarding inventory, solds, and months of inventory. It is jam-packed, but very helpful once you look at it. The main principle here is that neighborhoods with homes under $225,000 are selling fast, while upscale neighborhoods like Cherry Creek and Hilltop have significant levels of inventory and it's taking a long time to get homes sold, especially over the $1 million price barrier.
