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Denver-area home resales lag, but prices rise

Denver-area home resales lag, but prices rise

Denver Business Journal – by Paula Moore

Metro-Denver home resales dropped in June from the previous month and year over year, as expected, largely because of the April 30 expiration of federal homebuyer tax credits, according to residential brokers.

But resale prices rose, mainly because existing homeowners are buying relatively expensive homes.

Resales of houses and condominium/townhomes combined dropped to 4,046 from 4,365 (7.3 percent) in May and from 4,186 in June 2009 (3.3 percent), according to Metrolist Inc. data released Friday. Metrolist is metro Denver’s Multiple Listing Service, supplying home sale data to real estate professionals.

Home resales make up the bulk of metro-area housing sales.

Gary Bauer, an independent residential real estate broker in Littleton, attributes the drop in year-over-year home resales for June to the fact that sales didn’t measure up to “the frenzy” of resales during June 2009. Last year’s sales spike was prompted by the renewal of the federal government’s first-time homebuyer tax credit earlier in the year.

“Low interest rates and a good supply of homes on the market are driving sales in Denver, even after the homebuyer tax credits expired,” David Simonson, broker associate at Re/Max Professionals Inc. in Highlands Ranch, said in a Friday report of his own.

Mortgage rates now average 4 percent to 4.6 percent, depending on loan term.

Condo sales dropped significantly from May to June — 13.7 percent to 819 units — partly because move-up buyers are becoming more active, and they want houses, not condos, according to Bauer.

A brief history of U.S. homebuyer tax credits

The U.S. Congress started the first-time homebuyer tax credit in 2008, with a cap of $7,500 and as a loan. In early 2009, the Obama administration increased the credit’s limit to $8,000, said it didn’t have to be repaid and extended its expiration to Nov. 30 of last year. Last fall, a $6,500 credit, for existing homeowners wanting to buy a different home, was created to complement the first-time buyer credit. The expiration date for both credits became April 30 of this year, for home sales completed by June 30.

Congress recently extended the closing date to Sept. 30 because an estimated 180,000 U.S. homeowners wouldn’t be able to complete home purchases by the end of June, according to the National Association of Realtors.

Some brokers think the closing deadline extension also will extend the usual kickoff of the prime U.S. homebuying season from June to late August.

By the end of June in metro Denver, another 3,885 homes, including houses and condos, were under contract for sale, with sales not yet closed. That number was flat compared to May and down 31.4 percent from June 2009.

Selling prices rise

Average sold price for both types of home rose to $273,511 in June, from $248,126 in May (10.23 percent) and from $258,434 in the prior-year June (5.8 percent).

“Prices are being driven up by [move-up] buyers, who are buying more expensive homes,” said Bauer. “And inventory is up.”

Inventory of available resale homes was 23,240 units at the end of June, according to the Metrolist report. That’s up 6 percent from May and up 11 percent year over year.

More numbers

Other data from the June Metrolist report:

• Houses sold — 3,227, down 5.5 percent from May and down 3.03 percent from June 2009.

• Average sold price for a house increased 9.6 percent from May to $299,375, and up 5.7 percent year over year. Median selling price increased 6.09 percent from May to $244,000, and 2.7 percent from the year-prior June.

• Houses up for sale stayed on the market an average of 81 days, up 8 percent from May, but down 19.8 percent year over year.

• Condos sold — 819, down 13.7 percent from May and down 4.6 percent year over year.

• Average condo sold price rose 8.9 percent from May to $171,600, and 5.97 percent from June ’09. Median sold price increased 6.2 percent from the previous month to $143,350, and was up 2.5 percent year over year.

• Average days on the market for condos increased 10 percent from May to 87, but decreased 10.3 percent from June ’09.

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