Signs of life above $400k?

The market over $400k is still working through inventory

While the market for homes above $400k is clearly the weakest of the price ranges, there were some inklings of life during April. With between a year and five year’s supply available in the prices ranges above $400k, sellers shouldn’t be expecting too much relief in the short-term. However, increases in the number of properties under contract (and the corresponding US ratio) suggest the improvements in the lower price ranges may be trickling through.

For home sales between $400k and $500k – active listings fell slightly, sales dropped about 4%, properties under contract increased almost 20%, the Under contract to Sold Ratio (US Ratio) increased significantly and Months of Supply (MOS) hit 11.79. While the actual sales performance remained weak – the significant increase in the leading indicators (Under contract, US ratio) bodes well for the coming selling season. Depending on the increases in sales volume, this price range should begin to see more consistent price stability across Denver as the bargains are snapped up and loans become more readily available.

For home sales between $500k and $1M – active listings fell slightly, sales dropped about 5%, properties under contract increased 7.69%, the US Ratio increased healthily and MOS snuck below the 24 month mark. While sellers in this price range are not out of the woods yet, there are faint glimmers of hope – specific neighborhoods are beginning to see stronger activity and the potential for buyers to “move up” is only limited by the availability of jumbo financing – this remains the last piece of the puzzle for returning this segment to some form of normality.

Home seller’s with properties listed at over $1M saw very little change in their circumstances – sales were down slightly, the number of properties under contract was stable and inventory didn’t see any significant change. With five years of supply, buyers who can, and want to perform, have enormous leverage.

While it should be noted that the method of counting active listings for the DREAM statistics was modified slightly from March, the underlying trend for the Denver real estate market is positive. Prices should be stable to increasing below $500k, and as the summer buying season gets into full swing, sellers can expect realistic offers and buyers should continue to see opportunities.

* As of 5/12/09
** The complete DREAM statistics spreadsheet is available upon request