After tightening for 10 consecutive quarters, the inventory of homes available for sale in metro Denver loosened in the third quarter, according to a report Wednesday from Trulia.
“While it is nothing to celebrate wildly if you are home buyer, it may be a sign that the market is freeing up and that the gridlock is starting to break,” said Ralph McLaughlin, chief economist at Trulia, a residential real estate website.
McLaughlin, in an interview, even coined a new term to describe Denver’s housing market — “coolingish.”
Metro Denver’s inventory of homes for sale stood at 7,426 on July 1, up 2.8 percent from July 1, 2015, Trulia said. Hardly a huge gain, but metro Denver hasn’t seen a year-over-year increase in the quarterly count of homes available for sale since late 2013.
Nationally, the inventory of homes for sale in the third quarter fell 6.8 percent, marking the fifth consecutive quarter of year-over-year declines in the inventory of existing homes.
Trulia divides homes into three affordability tiers: starter, trade up and premium. In metro Denver, the inventory of starter homes, with a median price of $226,463, rose 12.3 percent. Trade-up homes, median price of $348,967, experienced a 16 percent increase in inventory. The inventory of premium homes, median price of $602,450, fell 4.1 percent.
Still, premium homes dominated, accounting for just under six out of 10 homes available for sale on July 1. Trade-up homes were about a quarter of the total and starter homes, which tend to move fast when they hit the market, were just 15.3 percent.
Metro Denver’s inventory is still only about 40 percent to 50 percent of the historical average, and remains super-tight. But McLaughlin notes a lack of affordability appears to be weighing on the Denver starter-home market.
The median price in that segment has shot up 20 percent in the past year, and “starter” buyers seeking a median home in that tier face mortgage costs at 46 percent of income — well above the 36 percent lenders are typically comfortable providing.
Another thing to watch for, McLaughlin said, is to what degree investors who acquired foreclosures and other bargains during the housing downturn put their rentals on the market and cash in at the peak. That could help push up inventory even more.
Metros with the biggest jumps in inventory included Cape Coral, Fla.; Miami; Las Vegas; and Fresno, Calif. San Francisco and San Jose, two of the nation’s most expensive housing markets, had 19.3 percent and 8.7 percent jumps in inventory in the third quarter, Trulia said.
Healthy demand will likely prevent home prices from falling any time soon in the nation’s hottest housing markets, said McLaughlin. But he does expect gains to moderate and notes buyers and sellers should pay attention to the chill in the air.
