Tuesday, September 18, 2012

Condo sales in Colorado, metro Denver hit 4-year high in August 2012

Condo sales transactions in metro Denver and statewide were up from 2011 during August, and hit the highest levels reported since 2008. Statewide, condo home sales were up 13.2 percent in August 2012 compared to August 2011, while in metro Denver, condo sales were up 16.1 percent.

The first graph shows that condo and townhome sales activity has started to move above the lows experienced during the most recent recession and its aftermath. Sales totals in metro Denver and statewide have moved above the pre-recession levels experienced during mid 2008, but are still down from peak levels seen during 2006 and 2007.

In the Pikes Peak area, growth in sales activity has been less robust. The condo sales total for August 2012 was up 21 percent from August 2011 and suggests that demand is beginning to build. Nevertheless, total activity remains below 2009 and 2010 levels.

The sales totals used above are 3-month moving averages of sales closings provided by the Colorado Association of Realtors. 

We can remove seasonal effects by using a 12-month moving average which will give us a good view of multi-year trends:

This recent growth trend in statewide and metro Denver sales is reinforced in the 12-month moving averages used to track trends in home sales.The third graph shows the 12-month moving averages in total condo and townhome sales in metro Denver and statewide. Overall, sales totals are clearly down from 2007, although average statewide sales have been moving up since the summer of 2011.

Both metro Denver and statewide markets have seen repeated growth since the troughs that occurred during June 2011.

The fourth graph shows year-over-year changes in the 12-month condo and townhome sales average. The moving average in statewide sales increased 8.1 percent, year over year, during August, which was the third-largest year-over-year increase since June 2010.  The metro Denver average rose 11.1 percent and was also the third-largest year-over-year increase for metro Denver since the 2008-2009 recession began.

In the Pikes peak region, growth just recently turned positive, with growth rising above zero during July and August for the first time since the end of the homebuyer tax credit. August's increase in the condo-sales totals is reflected in the 12-month average here as condo sales activity rose for the second time.  In the 12-month average, condo sales were up 2.3 percent, year over year, in August 2012. Total sales are down near what they were during mid-2009 during the recession.

Condo demand has tended to suffer much more than single-family demand during recessionary periods, and that has been the case during the most recent cycle as well. Growth is weaker in Colorado Springs than in metro Denver and statewide, but all areas are finally beginning to show some growth in recent months. This has no doubt been helped along by rock-bottom interest rates, however, and continued growth in condo demand will hinge at least partially on continued low rates.