With more people afraid their homes won’t sell in today’s slumping real-estate market, the number of existing homes listed for sale in the Denver metro area in September dropped from the same period a year ago.
An escalating number of foreclosures and short sales, combined with an excessive number of new homes on the market, is keeping people from putting their homes up for sale, industry experts said.
There were 30,335 metro-area homes on the market in September, down 3.55 percent from the same month last year, according to statistics released Thursday. Year-over-year inventory has dropped every month this year, bringing the number of available homes down from the highs of a year ago.
“Sellers, if they’re not in an upside- down position and they have any equity, are going to rent it out and hold on to it for another year or two until this whole mess washes out,” said Ed Jalowsky of Hottest Homes Realty. “If they don’t have the cleanest, freshest apple on the pile, the property is going to go stale on the market.”
Sales of existing homes also declined, in part because buyers can get better deals on new homes. The number of existing homes that sold in the metro area in September dropped 9 percent to 3,737 compared with September 2006.
The median price of a single-family home increased slightly from September last year to $245,000, while the median price of condos dropped 5 percent to $148,000.
“Part of the reason is the new-home builders are at a point where they have inventory on the ground, ready to go,” said Gary Bauer, an independent real-estate analyst who compiles a monthly report based on MetroList data. “The only way they’re able to sell that inventory is they’re making deals on every transaction.”
Homebuilders like Village Homes are seeing an increasing number of cancellations as their buyers are unable to sell their existing homes, said Matt Osborn, the company’s senior vice president of homebuilding.
The company’s inventory has been about level for the past few months, and it’s not adding more.
“We’re at a lower sales volume, so we’re certainly being cautious about any new inventory,” Osborn said.
The slumping market prompted the company to lay off employees this week, Osborn said. He declined to say how many.
“It’s just a reaction to the lower volume we’re seeing in the market right now,” Osborn said. “It’s no different than what a lot of the other builders are doing in town.”
In the metro area, builders sold 5,842 homes in the first half of the year, a third fewer than the 8,758 sold in the same period a year earlier, according to an August report by the Genesis Group. The inventory of unsold new homes during that period – the most recent information available – was 3,632, up 3.8 percent from last year.
One reason the inventory of existing homes got so high last year is because sellers thought their homes had appreciated more than they actually did, said Mike Burns, broker owner of Re/Max Professionals Inc.
“They were listing houses higher than where the market truly was,” he said. “That is starting to correct itself.”
But even though inventory is dropping, there are still too many houses on the market, said Larry McGee, president and managing broker of the Berkshire Group.
“And we’re going to have more foreclosures,” he said.
McGee points to a National Association of Realtors report that shows about 28 percent of loans made in Denver in 2002 were through the Federal Housing Administration, compared with less than 5 percent last year.
“In 2006, we had the lowest number of FHA loans in Denver in recent memory,” McGee said. “That’s because we had easy money. It wasn’t just money for the subprime market. It was easy money for anybody buying a first-time house.”
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
9%
Drop in sales of metro-area existing homes to 3,737 in September, compared with the same month in 2006
33%
Drop in sales of metro-area new homes to 5,842 in the first half of 2007, compared with the same period in 2006
