Sales Slow in July

interesting article on recent trends from denverrealestatewatch.com

Home sales slow more than seasonal drop. DMAR’s Rael thinks home sales may pickup in August.

Denver-area home sales slowed more than usual in July. Almost every other metric – new listings, under contracts, home price fluctuation – showed typical seasonal changes from June, shows a report released last week by the Denver Metro Association of Realtors.

"I really think most of what we saw in the July statistics was just normal, seasonal things,” said Anthony Rael, DMAR’s Market Trends Committee chairman.

“The one thing that really kind of surprised me was the slowdown in sales,” Rael said.

There were 5,079 home closings in July, a 10.79 percent drop from 5,623 in June and a whopping 17.59 percent drop from 6,087 in July 2015.

“Based what we are hearing the marketplace, I think the slowdown in closings might be more indicative there is an appraisal problem than anything else,” Rael said.

“I don’t think it is a comp issue,” he said. Finding comparable homes to justify the sales price can be a problem when home sale prices are rising rapidly, as they have been in the Denver area in recent years, Rael said.

Rather, he thinks a lot of appraisers happened to be on vacation last month.

“There already is a shortage of appraisers, and so if a lot of them are on vacation at the same time, it slows things down,” he said.

He said there is a huge shortage of VA-certified appraisers.

“VA appraisers are really backed up,” Rael said. “It’s not unusual to take three to five weeks before you can schedule a VA appraisal.”

VA loans account for about 5 percent of home sales in the metro area, he said.

Rael expects that lot of homes that would have closed in July, will close in August instead.

“I could be wrong, but I wouldn’t be surprised if we see a little bump in August closings,” Rael said.

There were 7,468 active listings on the market in July. That is only two fewer homes than were on the market in July 2015, but a 9.89 percent increase from the 6,796 home on the market in June.

“Last year, I think we hit the high water market in July and after that the inventory started to decline a bit,” Rael said.

“I have a feeling that we might see a bit of pick-up in inventory levels in August,” he said.

And, with a presidential election this November, mortgage interest rates are almost certainly going to stay low, he said.

He noted that one client recently locked in a 3.2 percent interest rate for a $630,000 jumbo loan and another client got a 2.8- percent 15-year loan.

The market also was a bit less frenzied, with fewer bidding wars in July, a trend he expects to continue through the rest of the year.

“With more choices for consumers, ridiculously low interest rates as the norm, seasonal dip in home prices, I think this fall is going to be a tremendous buying opportunity,” Rael said.

The average price of all homes sold was $412,312, a 12.91 percent increase from $365,196 in July 2015.

Home prices dipped 1.88 percent from the record $420,199 in June.

Rael noted that when he described the June market, he used the world “plateaued,” to describe housing prices.

That was a bit of an unfortunate word choice, as it was misconstrued by many in the media, he said.

“I had to clarify that when I said plateaued, I meant plateaued for the summer,” and not that prices were about to fall off the cliff, Rael said.

“We’re not heading into a bubble,” Rael said. “Prices are up 13 percent from a year ago. The sky is not falling. “

The small month-to-month decline in prices is fairly typical for this time of year.

In July 2015, for example, prices were down 2.33 percent from June.

Rael noted that he and many other real estate brokers would like to see prices rise at a more typical 5 percent to 6 percent level.

“The most important thing is that people can afford to buy homes in the Denver market,” Rael said.

“I don’t want my young nieces and nephews and children to be priced out of the market.”