What to expect in Q3 Since Our Usual Upswing Isn't Happening
We have Steve Danyliw, who I am honored to have as long as I've known him, which hasn't been long enough. He has been if you will, the man behind the curtain of DMAR's Market Trends report. He is a data geek, which speaks to my heart. He started the market trends report back with Gary Bauer in 2012. He's been in the industry pretty much since birth since his second-generation realtor, but officially he's been in 18 years, so he's seen the cycles. He's seen the seasons, and this season is unlike anything else. So I wanted to ask Steve, especially this week when the market trends report just came out. Steve, what are you seeing this month?
Steve: Maybe that not surprised you, but numbers different than where we usually go this time of year. Definitely this time of year, the market starts accelerating. The seasonality of the Denver metro market is that we typically hit the bottom in December and January. Then it's a quick acceleration up to June where we typically peak. Then it's a slow decline all the way back to December and in January. We just didn't see this covert housing market has just pretty much taken the air out of the balloon.
When it comes to that spring surge of the housing market and normal seasonal increases that we expect to this time of the year just have not happened. And the question then becomes, is this a short term situation?
Steve: It is short term, but the impact and the ability to recover, how long is that going to really take. There really is no easy answer because we're in uncharted waters and there is no way to go back and say, oh, this is like the financial collapse in '08, and so this is what we can expect to happen. There is this percentage of distressed sales, and we had short sales and foreclosures and, 2010 – 35% of what we sold in certain months were properties that were in some sort of financial distress. Right now, we're at about 0.1%. So we're still healthy and in those regards. But this time of the year we should be seeing seasonal increases. We would normally see new listings increased 5% this time of year from March to April. And we saw it drop by almost 30%. So there was a lot of red in this report. Is it scary? Not necessarily. It's not scary. We’re not falling off a cliff. This was all kind of expected.
You can't shut down an economy and not see these types of numbers happen.
So you'd expect this to continue into the May report as well, or the May data in the June report?
Steve: Generally, there are certain things, traditionally when a property goes under contract, it's 30 to 45 days to closing. And so you could always potentially look at the pendings or under contracts in a given month to kind of predict what the following month is going to be like.
Your pendings are going to turn into [closings], hopefully. They give you a good barometer of closings the following month. Historically, we should see about a 5% increase month over month in properties going under contract. This is part of that increase in the spring moving into the summer, and we dropped by about 30%. We had 30% fewer. so when you talk about what we see normally see seasonality plus the additional 30%. What it really means is that closings are also next month or the end of this month. The closings, they're going to be probably significantly down once again. Is it going to be in the 30% to 40% range off the pace from the same month last year? Probably to be conservative is probably going to be in that area could we be even a potentially little higher? It's possible.
Listen to the rest of this episode to hear more of Steve's insights for the coming two quarters.
Nicole Rueth The Rueth Team of Fairway Independent Mortgage Corporation 750 W Hampden Avenue, Suite 500 Englewood, CO 80110