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Glut of unsold homes sets Jan. record

Median price rises for month despite ample inventory

John Rebchook, Rocky Mountain News

Published February 10, 2006 at midnight

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Sellers were trying to unload 24,387 previously owned homes on the Denver-area market last month, a 16.6 percent increase from the number of unsold homes on the market in January 2005, according to reports released Thursday.

Although still below the record 28,043 homes clogging the market in June 2004, it is the largest number of houses ever on the market in January, Steve McGuire of RE/MAX Professionals said.

Metrolist Inc. released the housing data, which also show that the median price of a single-family home in January was $245,000, compared with $230,000 in January 2005.

Previously, Metrolist released data on the last full week of each month, so the statistics typically were released before the month ended. Starting with this report, it will release the data after the month is over.

"The inventory concerns me," McGuire said. "That's about 3,400 homes above where we were last January. That is a pretty high number to be starting with."

McGuire said his fear is that if the supply of unsold homes continues to climb and interest rates rise, knocking potential buyers out of the market, it could cause home prices to dip.

With only one month's data, experts say it's too early to call it a trend. Still, the home market seems to be defying the law of supply and demand. Typically, when the supply rises, prices drop, but that wasn't the case last month.

"The inventory is up and prices are up," independent broker Gary Bauer said. "It's a little surprising. It was a nice January."

Other good news: The number of homes placed under contract in January - 4,266 - was 22.2 percent higher than the 3,492 in January 2005.

Mark Eibner of Metro Brokers said the number of unsold homes on the market last month coincides almost exactly with the average number of homes on the market each month in 2005.

"I'm not concerned at all," he said.

This year, he expects the Denver- area market to get a boost from people selling their homes in previously hot markets that are starting to cool, such as California, Phoenix, Las Vegas and Washington, D.C.

He recently sold a 2,400-square- foot home in Parker with a basement to a couple from Orange County, Calif., for $265,000. They had paid $450,000 for their 1,800-square-foot home, with no basement, in California and sold it for $650,000.

"They made $200,000 in three years," Eibner said. "I really think we're poised to see people dump their homes in other markets to come here."

Ed Jalowsky, principal of Classic Advantage Realty, said that homes priced below $300,000 are facing a lot of pressure from homes in some stage of foreclosure.

He recently sold a foreclosed home on behalf of a lender in the Curtis Park area for $160,000 that sold two years ago for $210,000. Another broker unsuccessfully tried to sell it for $180,000.

At the same time, the high-end market seems extremely strong, he said.

"The market is very funky," Jalowsky said.

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