Tax Credits and REO Homes Drove Frenzy in Denver House Sales- By: John Cutts
The expiring tax credits and the price impact of REO homes drove the frenzy of homebuying in the Denver metro area in April.
Closed sales of pre-owned homes spiked by a whopping 24 percent year-over-year to 4,188 units, also marking more than 16 percent of increase from the previous month.
The total of single-family homes and condo units put under contract reached 6,616 units, up by a stunning 28 percent compared to one year earlier and up by 12 percent from the previous month. More than 78 percent of these or a total of 5,167 units were single-family houses.
Denver realtors said many of them were still working on sales contracts up to the last hour of April 30, as buyers were beating the expiration of the federal tax credits, which ended on that day. Sales contracts signed on April 30 but not yet closed can still qualify for the tax credits as long as they close on or before June 30.
Another factor that enticed buyers to buy in April was the still attractive price levels that resulted from the price impacts of REO homes. Foreclosed houses for sale in Denver County reached a total of 710 units in the first quarter, comprising 35 percent of the more than 2,000 foreclosure filings posted during the quarter in the county.
The average price of housing units sold in April was $274,253, down by 0.25 percent from the $274,950 average in the previous month, but marked an increase of 7.8 percent from the $254,442 average price in April last year. These price comparisons helped push sales in April as prospective buyers figured they had to buy before the pace of Denver foreclosure auctions slow down substantially and prices will shoot up again.
In the first quarter, the pace of foreclosure postings in Denver County surged by more than 22 percent compared to the previous quarter and by nearly 24 percent compared to one year earlier.
Similarly, the pace of foreclosure auctions in Colorado surged from the prior quarter, but at a much lower rate than Denver. Total foreclosure filings statewide rose by 8.99 percent from the last quarter of 2009 to a total of 16,023 filings, comprising 1.72 percent of total filings nationwide.
All in all, the double-digit increases in house resales in Denver in April amid the double-digit surges in foreclosure filings and REO homes in the first quarter indicate the strength of the metro area’s economy.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.