The lion’s share of homes sold in the Denver-area in the first four months of the year were priced at $300,000 or below, shows a report released today.
Of the 9,734 homes sold and closed through April 30, 6,663 of them – 68 percent – were priced at $300,000 or below, shows an analysis of Metrolist data by independent broker Gary Bauer. The single biggest price band was from $100,000 to $200,000, with 3,040 sales, followed closely by the $200,000 to $300,000 range, with 3,028 sales.
Tax credits fuel sales
“That is a direct reflection of the tax credits,” which required qualified homes to be placed under contract by April 30 and closed by June 30, said David Binkowski, principal of Prudential Real Estate of the Rockies.
“Most of the first-time buyers were buying in that price range,” he continued. “It is pretty clear that is coming from the tax credit. Almost amazingly clear. It is pretty much a hard-core fact.” (For a detailed look at April’s activity please visit .)
The Bauer study includes the smaller counties of Clear Creek, Elbert, Gilpin and Park, as well as Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson.
While a lot of prospective buyers did their best to take advantage of the $8,000 tax credit for first-time buyers and $6,500 for qualified current home owners, the Denver housing market will not fall off the cliff now that the deadline has passed, Binkowski said.
Rates and prices low
“Interest rates are still incredibly low and prices are still very good, so even without the tax credits, the market still presents a fantastic buying opportunity,” Binkowski said. “With the tax credits, buyers could have their cake with a cherry on top. Now, they can have their cake and eat it, too, but without the cherry.”
The average 30-year, fixed-rate mortgage averaged 4.72 percent, according to a Zillow.com survey released today, down slightly from 4.82 percent a week ago.
Binkowski said that while the tax credits were important to a lot of prospective buyers, and it may have convinced some to get off the fence, it was never the sole driving force to sign on the dotted line. He said some buyers missed the deadline because they could not find the right home, and he thinks most of them will stay in the market.
“And I think if the market does slump nationally without the tax credits, the government will come up with some other program,” he said. “The housing market is just too important to the economy to ignore.”
You’ll kick yourself if you don’t buy now
Tom Cryer, a broker with the Kentwood has often compared this time as the real estate cycle to the Denver-area of the late 1980s and early 1990s, before the housing market blasted off with rocket-like force.
Studying recent real estate data, reinforced that belief for him.
“It appears the bottom may be behind us,” according to Cryer. “It’s time to buy or kick yourself!”
Lydia Lin, principal of One Realty in Denver, said that while most buyers were well-prepared, some first-time buyers had unrealistic expectations. She said some prospective buyers, hoping to get the tax credit at the last-minute, had not taken the basic and necessary step of being pre-qualified by a lender. One woman she ran into at two open houses, had not even considered the Home Owner Association fees when she was considering her monthly cost of buying a home.
For some people, trying to buy a home caused an incredible amount of stress, especially when they came up short, she said.
Not everyone should be a home owner
“For buyers who were counting on the $8,000 as the only way they could afford to buy the house, they probably shouldn’t be buying anyway,” Lin said. “It’s probably not politically correct to say that, but I think it’s true. Those buyers are gone. But for those who were qualified to buy a home even without the tax credit, I thin they will take a breather and start looking again. Whether that breather will last a couple of weeks or a month, I don’t know. I do think the market is starting to feel like a regular market again.”
Bauer couldn’t agree more.
“It really is what I call a ‘normal’ market,” Bauer said. “During the last few years, most of the activity was at the very low end. But now we are seeing more activity at all price levels. Denver is and remains a very affordable housing market, as it has been historically.”
He noted that during the past couple of years, much of the activity had been focused on homes priced below $100,000. Now, there were only 595 home sales in that price range.
“At any given week, there is only a week’s supply of homes in the zero to $100,000 range,” Bauer said. “There has been so much demand for homes in that price range, that it has driven prices up at the very low-end.”
