Thursday, March 1, 2012

Condo and townhome sales activity up in Colorado

Condo and townhome sales in metro Denver and statewide increased, year over year, for the seventh month in a row in January 2012, and they increased for the second month in a row in the Pikes Peak region. According to condo and townhome sales data released by the Colorado Association of Realtors, sales increased statewide 6.4 percent in January 2012 from the same month a year earlier. They increased 8.9 percent in metro Denver over the same period. In the Pikes Peak region, January sales increased 8.5 percent. In January, there were 778 condo and townhome sales statewide. 487 of them were in metro Denver and 76 were in the Pikes Peak region.

This recent growth trend in statewide and metro Denver sales is now seen in the 12-month moving averages used to track trends in home sales. The highly-cyclical nature of home sales trends makes it difficult to track multi-year trends in home sales, so using a moving average makes it easier to identify longer-term trends. Additionally, the introduction of the homebuyer tax credits from 2008 to 2010 further complicated the picture.

The first graph shows the 12-month moving averages in total condo and townhome sales in metro Denver and statewide. The overall trends since 2007 is clearly downward, although average statewide sales have largely stabilized since late 2009. Until recently, the moving average for condo and townhome sales had continued to move downward through late 2010 and most of 2011, although there have been some gains in recent months. The moving average in statewide sales increased 3.1 percent while the metro Denver average fell 0.3 percent. Nevertheless, the metro Denver decrease was the smallest year-over-year drop since October 2010.

The second graph shows year-over-year changes in the 12-month condo and townhome sales average. We see increases during 2010 following the end of the homebuyer tax credit period. The year-over-year changes moved back into negative territory by early 2011, and the year-over-year change in the moving average in metro Denver has remained negative for the past sixteen months. Statewide, the year-over-year change has turned positive since November 2011. The magnitude of the the decline for each month has lessened in metro Denver over the past eight months.

In the Pikes peak region, similar trends hold, although the homebuyer tax credits seem to have had a broader impact with the year-over-year change in sales remaining in positive territory for 15 months in a row. As can be seen in the third graph, sales activity has since declined. With a drop of 17 percent, January 2012's year over year change was the largest decline reported since June 2009. This suggests that sales activity for condos and townhomes in the region continues to face headwinds.