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Old 07-03-2014, 02:38 PM
 
Location: Just south of Denver since 1989
11,815 posts, read 34,300,444 times
Reputation: 8935

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We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now may be the best time to sell your house. Let’s look at the data covered by the latest Pending Home Sales Report and Existing Home Sales Report.

THE PENDING HOME SALES REPORT

The report announced that pending home sales (homes going into contract) “surged” by 6.1%. The increase was “the largest month-over-month gain since April 2010, when first-time home buyers rushed to sign purchase contracts before a popular tax credit program ended”. Lawrence Yun, NAR’s chief economist, expects improving home sales throughout the rest of the year: “Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation.” Takeaway: Demand is beginning to increase dramatically compared to earlier in the year.

THE EXISTING HOME SALES REPORT

The most important data point revealed in the report was not sales but instead the inventory of homes on the market (supply). The report explained:

Total housing inventory climbed 2.2% to 2.28 million homes available for sale
That represents a 5.6-month supply at the current sales pace
Unsold inventory is 6.0% higher than a year ago
There were two more interesting comments made by Yun in the report:

“Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market.” In real estate, there is a guideline that often applies. When there is less than 6 months inventory available, we are in a sellers’ market and we will see appreciation. Between 6-7 months is a neutral market where prices will increase at the rate of inflation. More than 7 months inventory means we are in a buyers’ market and should expect depreciation in home values. As Yun notes, we are currently in a sellers’ market (prices still increasing) but are headed to a neutral market.
"New home construction is still needed to keep prices and housing supply healthy in the long run.” As new construction begins to be built, there will be increased downward pressure on the prices of existing homes on the market.
Takeaway: Supply is about to increase significantly. The supply of existing homes is already increasing and the number of newly constructed homes is about to increase.

Bottom Line

If you are going to sell, now may be the time.
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Old 07-03-2014, 02:42 PM
 
Location: Denver
898 posts, read 935,058 times
Reputation: 865
Quote:
Originally Posted by BBurn View Post
I think 2b is saying that he/she believes the Denver market is going to keep going up.

I'm no swami, but if inventory stays low, why would prices drop? There are enough people with money in- and out-of-state to sustain a low-supply-high-price market.
I just don't believe it's sustainable over a long period of time. Could it be a year out? Two years? Five years? I'm not sure. What I do know is this; unless you have multiple incomes supporting the household, it just doesn't seem practical given what we know about incomes here. People do not make that much in CO, certainly not as much to sustain "Cali" or "East Coast" housing prices.

This is not the first time Denver has seen such a boom. It won't be the last.

Besides, and more importantly, people don't live forever. I suspect the bottom will drop out eventually as the aging populace declines.
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Old 07-03-2014, 02:50 PM
 
Location: Berkeley Neighborhood, Denver, CO USA
17,676 posts, read 29,602,778 times
Reputation: 33227
Default Then please explain

Quote:
Originally Posted by 4DM1N View Post
Agreed. This market is unsustainable over a long period of time given Denver's median income level
How do you explain:
Toronto
Vancouver
all of Australia
Hong Kong
Singapore
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Old 07-03-2014, 02:52 PM
 
Location: Denver
898 posts, read 935,058 times
Reputation: 865
Quote:
Originally Posted by 2bindenver View Post
We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. The last two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now may be the best time to sell your house. Let’s look at the data covered by the latest Pending Home Sales Report and Existing Home Sales Report.

THE PENDING HOME SALES REPORT

The report announced that pending home sales (homes going into contract) “surged” by 6.1%. The increase was “the largest month-over-month gain since April 2010, when first-time home buyers rushed to sign purchase contracts before a popular tax credit program ended”. Lawrence Yun, NAR’s chief economist, expects improving home sales throughout the rest of the year: “Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation.” Takeaway: Demand is beginning to increase dramatically compared to earlier in the year.

THE EXISTING HOME SALES REPORT

The most important data point revealed in the report was not sales but instead the inventory of homes on the market (supply). The report explained:

Total housing inventory climbed 2.2% to 2.28 million homes available for sale
That represents a 5.6-month supply at the current sales pace
Unsold inventory is 6.0% higher than a year ago
There were two more interesting comments made by Yun in the report:

“Rising inventory bodes well for slower price growth and greater affordability, but the amount of homes for sale is still modestly below a balanced market.” In real estate, there is a guideline that often applies. When there is less than 6 months inventory available, we are in a sellers’ market and we will see appreciation. Between 6-7 months is a neutral market where prices will increase at the rate of inflation. More than 7 months inventory means we are in a buyers’ market and should expect depreciation in home values. As Yun notes, we are currently in a sellers’ market (prices still increasing) but are headed to a neutral market.
"New home construction is still needed to keep prices and housing supply healthy in the long run.” As new construction begins to be built, there will be increased downward pressure on the prices of existing homes on the market.
Takeaway: Supply is about to increase significantly. The supply of existing homes is already increasing and the number of newly constructed homes is about to increase.

Bottom Line

If you are going to sell, now may be the time.
Yep. Companies weren't building for so long because the economy was still trying to dig itself out of a pretty deep hole. Now that we're in a full-blown rebound, construction is booming again and companies are starting to dip into their reserves that they were hoarding for the last few years. I truly believe it's only a matter of time before it becomes more or less a buyer's market. It won't be a steep decline, but prices will be more reasonable from a buyer's standpoint. $400k for a 3BR ranch in a market where the average person just barely clears $30k/yr does not make sense.
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Old 07-03-2014, 02:55 PM
 
Location: Berkeley Neighborhood, Denver, CO USA
17,676 posts, read 29,602,778 times
Reputation: 33227
Default You do know

Quote:
Originally Posted by 4DM1N View Post
as the aging populace declines.
Huh?
Population is forecasted to INCREASE
The current LEGAL annual immigration into the USA is 1M

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Old 07-03-2014, 02:58 PM
 
Location: Denver
898 posts, read 935,058 times
Reputation: 865
Quote:
Originally Posted by davebarnes View Post
How do you explain:
Toronto
Vancouver
all of Australia
Hong Kong
Singapore
There are plenty of articles online about these cities COL and income gaps. Here's one for instance about Vancouver.

For Vancouver, housing and income don

One reason why I don't think Denver quite compares with these scenarios is because it's not (yet) considered a world-class business center like these cities are. The cities you just listed off are like the equivalent of NYC, SF, and LA in the US. Denver is not quite on that level, at least not yet. Maybe in the future, but I doubt it since we're in a non-coastal region.
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Old 07-03-2014, 03:02 PM
 
Location: Denver
898 posts, read 935,058 times
Reputation: 865
Quote:
Originally Posted by davebarnes View Post
Huh?
Population is forecasted to INCREASE
The current LEGAL annual immigration into the USA is 1M
The Boomers represent one of the largest sectors of the US population, and they're getting near that point in their lives where they cease to exist (I'm sorry, I couldn't put it any less vulgarly).

Just like the economy, of course population will grow over a long period of time. However, it's also projected to drop in the next decade or so.

Also, the immigrants you're referring to are expected to come primarily from impoverished 2nd and 3rd world countries countries like Mexico and various Central American nations. They sure as hell can't afford the homes in Denver.
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Old 07-03-2014, 03:52 PM
 
Location: Berkeley Neighborhood, Denver, CO USA
17,676 posts, read 29,602,778 times
Reputation: 33227
Default Wrong! Data are your friends

Quote:
Originally Posted by 4DM1N View Post
the immigrants you're referring to are expected to come primarily from impoverished 2nd and 3rd world countries countries like Mexico and various Central American nations.
Yearbook 2012 | Homeland Security
Total legal immigrants for 2012 = 1,031,631
Asia = 416,448
Americas = 409,664
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Old 07-03-2014, 03:57 PM
 
Location: Berkeley Neighborhood, Denver, CO USA
17,676 posts, read 29,602,778 times
Reputation: 33227
Default Wrong! Data are your friends

Quote:
Originally Posted by 4DM1N View Post
population will grow over a long period of time. However, it's also projected to drop in the next decade or so.
2012 National Population Projections: Summary Tables - People and Households - U.S. Census Bureau
Even the "Low Series" shows growth. Every year.
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Old 07-03-2014, 03:58 PM
 
Location: Denver
898 posts, read 935,058 times
Reputation: 865
Quote:
Originally Posted by davebarnes View Post
Yearbook 2012 | Homeland Security
Total legal immigrants for 2012 = 1,031,631
Asia = 416,448
Americas = 409,664
Well, that's in 2012. I thought your last graph was for future projections, no?

Probably more relevant to the point:
U.S. Population Projections: 2005-2050 | Pew Research Center's Hispanic Trends Project


Either way, we're straying off topic.
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