Colorado REALTOR Digital Magazine April 2012 : Page 3
Low Housing Inventory-A Good or Bad Thing? “Weak seller confidence According to Vectra Bank president and CEO, Bruce Alexander there is only 3.3-month of supply of homes on the market. According to DepartmentofNumbers.com as of April 16 2012 there were about 14,931 single family and condo homes listed for sale in Denver Colorado. The median asking price of these homes was approximately $294,999. Since this time last year, the inventory of homes for sale has decreased by 32.8 percent and the median price has increased by 13.5 percent. Across Colorado on average housing inventory is approx 15 percent – 20 percent less than this same time last year. So what should we make of this lack of housing inventory? Is this a good thing or a bad thing? It depends on if you are the buyer or seller. Home sales in the majority of areas in Colorado are up 3 out of last 4 months by approximately 6 percent. It has been reported that multiple offers are even being made on homes-good for sellers. It was only three years ago that there were plenty of homes on the market, and sellers were getting frustrated because buyers were taking their time with all the choices they had. And while year-over sales activity has been strong the overall housing market con-tinues to show a drop in prices-good for buyers. But how can this be? Traditionally when inventory is low prices rise-simple supply and demand right? The new theory is that sellers’ confidence has been shaken from years of having a hard time selling their homes and a big decline in distressed inventory entering the market. “Weak seller confidence is causing property not to be released into the market unless the need to sell is not optional,” said Dr. Lawrence Yun, National Association of REALTORS®. With re-sale inventory so low will new builds start increasing? The Division of Housing is reporting that housing starts were slightly higher and expectations for future home-building remained positive, and building materials were generally available. Sales at construction supply firms were stable, with some contacts noting increased business among multi-family and remodeling contractors, and expectations for future activity were favorable. page 3 | www.ColoradoREALTORS.com is causing property not to be released into the market unless the need to sell is not optional” said Dr. Lawrence Yun However, not everyone is sold on the notion that home builders will start build-ing more to bridge the inventory gap. Some home builders are skeptical about home builders starting to move much, they feel prices need to jump at least 5 percent for $180,000+ homes for that to happen, and right now they just aren’t seeing it. They are saying that most of the improvement is at the low end and feel it just “does not make sense to spend $150,000 to build a house that will only sell for $160, 000.” Depending on who you are talking to the low inventory, declining housing prices phenomenon could be a good thing or not so good. A good indicator will be when and if the housing market stabilizes. Stay tuned!
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