A recent report by ShowingTime, one of the nation’s biggest showing services, indicated that real estate showing activity in the western states has slowed by 6.9%, while increasing 0.2% nationwide. But that’s only one study by one company. And while ShowingTime might be a major player on the national stage, the Denver market is dominated by Centralized Showing Service (CSS). I searched their website for statistics on this subject.
According to CSS, showings of listings in Jefferson County — based on an analysis of eight diverse ZIP codes — are up by 30% this summer (June 1 through August 21) over the same period in 2017. Denver was even more active, with showings up 40% over that same period last summer.
Despite that surge in showings, REcolorado, our metro area MLS, shows that sales are not increasing, but are showing barely any let-up from the previous four years, as shown in these two charts:
The agents at Golden Real Estate have observed a slowdown in sales activity in recent weeks, and that slowdown is reflected in the fact that as of this Tuesday there were only half the number of sold listings in Jefferson County and Denver as there were in all of August 2017, suggesting the figure will be down somewhat when this month closes out next week.
I’m often asked whether we’re about to see an end to this seller’s market, and my reply is in the negative. This is due primarily to the shortage of new homes and condos being built, while the net in-migration of people moving to Colorado (primarily to our metro area) from other states remains quite high. The housing market has no immunity against the law of supply and demand, and as long as there are more people relocating to our area than there are homes being built, we’re going to remain in a seller’s market. This more-people-than-homes scenario means many would-be buyers have been forced to rent. Rental apartments, which have been built in great numbers throughout the metro area, are absorbing most of these would-be buyers..
Prior to, say, 2012, those apartment buildings would have been built as condominium projects, but condo construction dropped nearly to zero in recent years because of the state’s construction defects law. In 2017, new legislation reduced the legal and insurance risks associated with building condos, so that trend toward building apartments instead of condos is gradually abating, and after the mandatory six years of “repose,” many of those apartment buildings may be converted to condos.
The MLS is limited in its ability to show how many condos have been built and sold since the change in the construction defects law, because condo sales by builders are not typically reported on the MLS, meaning they can be found only by searching public records.
Even with the coming resurgence of condo construction, the fact remains that many would-be buyers are stuck in rental apartments because of the continuing overall shortage of homes for sale. Any increase in the number of homes on the market has been wiped out by an increase in the number of sales. For this reason, inventory levels have remained at either one or two months since January 2014.
Conventional wisdom says that May through July is the “selling season” for homes, primarily because of families not wanting to move during the school year. However, I would suggest that real estate sales are no longer seasonal and that May through July should be thought of as the listing season instead of the selling season, if only because so many sellers believe that it’s the best time of year to list their home. Nowadays winter is the best time to list a home for sale, because there are just as many buyers but fewer listings, because other sellers are waiting for the “selling season.”
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