2012 a champion year for home sales!
Last year, buyers in the Denver area closed on $12.945 billion in homes. That is a $2.88 billion increase from the $10.063 billion in 2011, the biggest year-over-year increase on record. To put that increase in perspective, the increase is about the combined size of the GDPs of the countries of Belize and Bhutan.
If every season ticket holder at Sports Authority Field at Mile High had decided to sell their ticket to the Broncos vs Ravens playoff game at $300 each, the increased home sales dollar volume would have been enough to fill Mile High more than a dozen times over. Unfortunately, the Broncos aren’t going to the Super Bowl, but if the Denver housing market was a team, Team Denver would have been a comeback champion in 2012.
There were 46,299 home closings last year, a 17.5 percent increase from the 39,387 in 2011. The number of closings were the equivalent to every man, woman and child who lives in Greenwood Village, Capitol Hill, Highland and West Highland and Cherry Creek buying a home.
Homes placed under contract were even more impressive, growing by 19.1 percent to 56,412 last year, compared to 47,375 in 2010, which bodes well for continued strong sales in the first part of 2013. The average price of a home, year-to-date at the end of 2012, was $304,176, an 8.7 percent increase from the $279,856 at the end of 2011. “The stellar housing market provides a boost for the entire economy,” noted Patty Silverstein, chief economist for the Denver Metro Denver Economic Development Corp.”In 2012, the sheer number of sales was much bigger than any expectations. It was huge. And home prices steadily rose,” Silverstein said.
“Home sales have quite the multiplier effect,” Silverstein continued. “Obviously, it is money in the pocket of the seller. Whether they used it to buy a bigger home, a smaller home or become a renter, it is money that will find its way back into the economy. Then there is everyone involved in the transaction – the mortgage broker, the title insurance officials, the Realtor. And once somebody buys a home, they generally go out and furnish the home and the ripple effect continues.”
The price increase easily bested the inflation rate of about 2 percent, but wasn’t the double-digit returns found in formerly beat-up housing markets such as Phoenix, leading to worries another mini-bubble might be forming. Denver-area buyers, however, had fewer homes to choose from in 2012 than in almost four decades. There were only 7,706 unsold homes on the market in 2012, the lowest point since 1973.
The last time there were fewer homes for sale, Richard Nixon was President, the war in Vietnam was ending, and mortgage interest rates were at 8.54 percent compared with 3.35 percent for a 30-year, fixed-rate loan at the end of 2012. That also was the year that the Broncos posted their first winning season.
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