Denver home sales followed the national trend this summer. June home sales increased 15% over May while July sales increased by 6% over June. The June sales were the highest this year. Prices in June also increased a whopping 6% over the previous month.
The Denver real estate market has been improving throughout this year but these are the best numbers so far. The question is, of course, why are these numbers increasing so dramatically.
The answer is that most of the activity is occurring in homes priced under $300,000. First-time homebuyers and investors are competing over a diminishing number of homes on the market. This is putting upward pressure on prices and improving sales in this market segment.
The first-time home buyer tax credit offered by the federal government is $8,000. This incentive has drawn in many first-time homebuyers to the marketplace. Nationally, first-time homebuyers account for almost 30% of all home sales. We've noticed that most of our sales this year have been to first-time homebuyers.
The number of distressed homes sales has dramatically decreased from a year ago. Foreclosures and short sales no longer comprise the majority of homes priced under $300,000. In some of our better neighborhoods there are no foreclosures or short sales.
Investors have also been grabbing up low-price homes. Most investors are buying homes to fix up for rentals in Denver metro area and surrounding neighborhoods. The Denver rental market has been fairly strong. Now, more rental homes are coming onto the market. So the supply is increasing and rental prices are softer. Investors now have to look harder to find low-priced homes that will cash flow with 25% down payment.
The slowest segment of the Denver real estate is luxury homes. Only 8% of all sales in June were homes priced over $500,000. In many of these areas there is a 12 to 18 month supply of homes on the market. Luxury home buyers certainly have a great selection. Prices are soft and buyers are able to negotiate even lower prices.
Denver Post reports, July sales increased, the number of homes under contract actually fell slightly as did average prices. Some local brokers have attributed this to seasonal conditions.
This market update was provided by Larry Hotz a Denver Real Estate professional that serves Denver and all surrounding areas.