Indecision boosts home inventory
Though median price inches up in March, 23,967 still on market
rockymountainnews.com
By John Rebchook, Rocky Mountain News
March 26, 2003
War and weather has hammered the home sales market in the Denver area this month.
But it's the economy that will determine whether March was an anomaly or a sign of a deteriorating market.
While the median, or middle, price of a previously owned single family home sold and closed in March actually rose to $224,000 from $220,000 in February, most of the other data released in two reports on Tuesday were fairly grim for home sellers.
There are a record 23,967 unsold homes on the market, and brokers say that buyers want to look at each one before they pull the trigger on a purchase.
While that's an exaggeration, there are 30.8 percent more unsold homes on the market than in March 2002, and 4.3 percent more than in February, according to the reports by Coldwell Banker and Jerry and Steve McGuire of RE/MAX Professionals in Highlands Ranch. The figures are based on data released on the last week of each month by MetroList, and adjusted for the number of weeks in each month.
The reports also show that only 2,327 homes were placed under contract in March, the worst March since 1990 for sales. And while March marks the beginning of the prime selling season, it apparently was the first time that there were fewer homes placed under contract in March than in February.
"The weather had a lot to do with it - last week was totally shot," said Kate Rossi, president of Coldwell Banker in Colorado. "And I do think the war has a lot to do with it, too. It makes people more cautious. Agents are saying they have to show buyers up to 30 homes before they make a decision to buy. They want to see everything and there's a lot to choose from."
But she remains confident the market will pick up this year.
Joe Jurschak, principal of Realty One Colorado in Cherry Creek North, said it's not that significant that the median and average prices have remained fairly steady in the first quarter. The median price is considered a better measure of the market than the average price, because it is not as skewed by a few expensive sales.
What is more important is the supply of unsold homes, the number of homes under contract and the number of homes sold, he said.
"Although we have almost a third more homes for sale now than a year ago, we have a third fewer homes under contract and a third fewer homes sold this March compared to last March," Jurschak said.
The downturn is due to the economy, more than the war with Iraq, he said.
Many people believe the war will end soon, but they're not as certain the economy will recover quickly, he said.
Not even near-record low interest rates can buoy the real estate market forever, he said.
No matter how low rates fall, "People still need to have jobs to buy houses," he said.
Gary Bauer, an independent broker and real estate consultant, said he isn't surprised by the record inventory and the sluggish sales pace.
"Any momentum out there has been stopped by the blizzard and the war," Bauer said.
Several brokers told him that potential buyers, who also fear for their jobs in this tenuous economy, remain on the sidelines.
Jerry McGuire noted that last Thursday his office only had one showing, but that rose to 41 on Friday and 156 over the weekend.
On a nice weekend, it's not uncommon to have well over 200 showings on Saturday and Sunday, he said.
"This weekend might be a slow one, if we get hit by another storm," he said.
Steve McGuire, his son, said that while last week's storm had a short- term impact, in the long run it will be a "billion-dollar gift to our drought-stricken state."
When the war is over and Congress approves the budget, consumer confidence will get a boost, he said.
And while mortgage interest rates are gyrating daily, rising slightly above 6 percent last Friday before coming down again, he said that could also boost the market.
"If rates creep up a bit, that could get some buyers off the fence," he said.
And the market could use such a boost, he said. "There's no urgency to buy." |
