“Housing market’s slide extends into August” was the headline of an article in the Sept 7 edition of the Denver Post. The sub-headline added “August numbers confirm slowing trend.” (click for full article)
The takeaway for most readers of these headlines is probably that the housing market is cooling, and might even be showing the first signs of a market slump or correction. After all it’s not a big leap from “slide” to “slump.” And as long as we’re going there, a bursting bubble can’t be too far off.
While those conclusions are understandable given the tone of the headlines, they would be based on a complete misread of the market data by the Post and its contributors. In fact, taking a close look at the raw market data serves as a good lesson for how even informed folks can misread the market. Let’s break down the market, stat by stat, using the same data used by the Post:
- Median Sold Price: $410,000; -2.4% month-over-month; +7.9% year-over-year. The DP reported “median home prices dropped for the second straight month” based on the monthly decline of 2.4%, all but ignoring the much more important year-over-year metric which showed a robust 7.9% increase. The month-over-month change in median price is an irrelevant metric that follows a predictable seasonal pattern. Year-over-year is the only metric that matters here, and a gain of 8.6% shows a strong market, certainly not a “sliding” market.
- Number of Sales: 3,604; -8.7% month-over-month; -10.6% year-over-year. August sales being lower than July sales is a typical seasonal pattern, but the drop year-over-year in sales is a possible cause for worry and worth looking at more closely. A superficial read of the data might conclude that the lower sales means less demand from fewer buyers, aka a “slide”. However, a more thorough analysis would not draw any conclusions without looking at the supply side of the equation, our next stat.
- Listing Inventory: 5,634; -1.2% month-over-month; -3.2% year-over-year. Hmmm, we might be onto something here. The number of homes for sale is extremely low, even lower than last year. This shortage of homes on the market just might be the reason the number of sales is down. The market isn’t “sliding”, there just aren’t enough homes for all the buyers. It’s like walking into the grocery store, seeing lots of shoppers, but the shelves are all half empty.
- Days on Market: 27; 0.0% month-over-month; -6.9% year-over-year. A drop in the average time it takes to sell a home indicates a market that is getting stronger, not sliding. Not to mention, an average time on market of just 27 days is about as low as we’ve ever seen and means the market is hot. Three years ago, our days on market was over 55, and homes were taking twice as long to sell.
When you go beyond the headlines and look closer at the actual data, a different picture of the market emerges. The goal of this “lesson” was to empower you the reader with the ability to analyze the market yourself and draw your own conclusions. My goal for all my clients is to help them get smarter about the market so they can make informed real estate decisions. Decisions that are based on empirical data and facts, not headlines that are meant to sell newspapers.
Hope you and yours are enjoying the early fall, a truly magical time of year in Colorado.
A Refreshing Look at the Question “What is my House Worth?”
Let’s take a look at some of the stats for our area to get a better idea of what is going on in the local housing market!
In Estes Park for August 2017, the average sales price* was:
- $451,500 for Single Family Homes (up 6.0% from 1 year ago)
- $287,000 for Condos/Townhomes (up 14.5% from 1 year ago).
I have access to detailed stats across Colorado and can help you find out the worth of your property any time. I can also help you determine what your home is worth even if it’s in a different area. As always, I am here for you. If it’s time for you to buy or sell, let’s talk.
*Median sales price based on a six-month moving average