April 2016 proved to be very similar to last year as you can see in the chart! This year’s inventory shortage, because it has been prolonged, makes it different than years prior, with pros and cons for both Buyers and Sellers. In some respects it shows signs of being as unbalanced as the market was in 2007/2008.
Let me explain. This kind of Seller’s market is causing Sellers to NOT list because they have no where to move up/move down to. Renting was a great plan B a year and a half ago, but rents are rising and making plan B look less attractive. As I sit at listing appointments I can point out seductive sales prices, Buyers forgoing appraisals and inspections and quick sales, but Sellers still are no less hesitant to put their homes on the market. This is causing an even greater tightening of housing inventory as we move into Spring. This market is too unbalanced and is beginning to cause hardships for both Buyers and Sellers.
If you look at Colorado’s supply numbers they are down for the whole state to 2.2 months (33% year over year ) of supply and if you look at Denver Metro we have moved from 1.7 to 1.3 months of supply. This slowing begins to cause a build up of demand similar to what we saw right before 2013. I wish I had a crystal ball that could tell us when this pipeline of Sellers will burst!
Even though we are without a crystal ball, I am thinking that as home prices start to rise more minimally, Sellers will begin to have thoughts that mirror this: “Uh, Oh I better sell now before things slow too much”. We saw our first single digit (median house price) increase month over month in March, and then we saw it again in April….If this trend continues I see it as a good thing, a move towards a more balanced market.
I am always looking for balance in my life, aren’t you?