One-third of the way through 2019 already and we’re not bucking any big trends. The seasonal trend that’s held true for the last 6+ years is still holding true today. We have more total homes on the market in the Denver Metro area, but all of the increase is in attached properties (think condos, townhomes, duplexes, etc). We’re actually down from last year in the world of detached single family homes. The biggest limiting factor on home sales is availability right now. Home values are still going up. The number of days to sell a home has been going down (but will start to head up again in the next couple of months). The number of multiple offers has gone up. The number of “flash” sales (properties sold in less than a week) have gone up. If you’re a buyer right now, you might be feeling a bit frustrated. Though, if you’re buying in the condo market, you might actually be feeling better.
Affordability will be what slows our market down… eventually. For those saying “Prices can’t stay this high!”, history disagrees. Affordability going down will put downward pressure on prices. And, our market is still based on supply and demand. So as buyers demand housing and our supply stays low, we’ll keep pushing prices higher. Historically, even as affordability goes down, our prices in Denver tend to flatten but haven’t dropped dramatically. Affordability is not what caused the 2008-2012 recession. That was caused by poor lending practices and greedy investors on wall street. All the indicators show a strong market here in Denver with a solid financial base.
The problem with low affordability is more and more buyers are needing to maximize their budgets to qualify for homes that fit their basic housing needs. This makes lending more difficult and it takes longer. If we’re not careful, we’re setting the stage for a few more short-sales and foreclosures in the future as our rate of appreciation eventually slows down.
Last year we saw the peak in activity happening in May and the market started cooling off as we hit the summer months. Everything we’re seeing indicates that this is the same trend we’ll this year. For sellers, NOW is the time to get on the market before you have too much competition. I can have you listed in as little time as a few days or so!! (But prefer a few weeks).
I’m still expecting around 7-8% appreciation again in 2019. Waiting to buy isn’t saving you any money. And when interest rates start going up again, that’s just going to drive more buyers into the market and cause prices to move higher than previously expected. So, as we continue to be in a seller’s market, the time to make your move is now. Once you’ve closed, the appreciation can start working FOR you instead of AGAINST you!
Share your real estate goals with us and we’ll be sure to help you hit them! Based on your goals, we’ll get you on the right plan that will make you happy to have a friend in the real estate business.
Let’s dive into our local numbers.
Real estate is local. What’s happening nationally doesn’t determine what is happening here in Denver, CO. You wouldn’t get your weather from a meteorologist in Florida, would you? You shouldn’t get your real estate updates from national resources. National news does a fine job of giving us an overview of the economy and market across the country, it doesn’t tell us what’s happening in Denver real estate. That’s why I’m here. I take the local numbers and break them down to help anyone understand the driving forces in our market. Below are the graphs and numbers along with my breakdown of what’s happening in today’s Denver market.
Home values are strong in this one! Denver continues to push values higher and higher We’re up over 6% from the same month last year. Since this is based on prices that were negotiated in March, this is a lagging indicator of our market and I don’t give it much weight. So, at $518,639 in Denver and $463,503 in our MLS, we’re still an expensive city to buy in. We expect the Average Sold price to continue increasing through May and into part of June before leveling slightly. This makes now a great time to move up into something bigger!
For new listings hitting Denver’s market in April, we see that we’re up more than 8% over February last year with 1,794 new listings hitting the market in Denver and 9,313 new listings in the entire MLS! We’ll see these numbers continue to move up a lot over the coming months as sellers love hitting the market in the summertime. This is one side of the coin that drives the values.
In the same month we saw nearly 1800 new listings come to the Denver market, we put 1,640 listings under contract. So our buyers are basically keeping up with the new listings. We’ll keep watching these numbers and I anticipate sellers to significantly outpace the buyers in the next few months. Across the entire MLS, we also had a few more sellers vs buyers.
So, while buyers and sellers stayed similar last month, our active listings are up overall, but actually down if you’re looking at detached properties. In Denver County, we’re a little higher than last month at 1,714, but 23.4% more than last year. In the whole MLS we’re at 10,047 which is similar to last month and 24.5% over last year. Remember, this includes both condos and detached single family homes as well. So, the majority of our increased inventory over last year is due to the updated Construction Defect Laws that were passed, as well as the expansion of our MLS. If you look at detached properties only, we’re lower than we were last year. Either way, we’re still sitting in an extreme seller’s market.
So, here’s the quick number to watch – “Months Supply of Homes” or it also works to be called “Homes per Buyer”. In a balanced market, we’ll see 6 months of inventory or 6 homes per buyer. This gives enough selection for buyers that home values tend to stay flat. Currently, we have 1.7 homes per buyer to choose from. And if no new homes come on the market, then we’ll run out of houses to sell in less than 2 months. So, call me to start selling your homes!!!
While this may be the highest months of supply we’ve seen since July of 2014, you can see we’re still in an extreme Seller’s market. As our supply continues to stay at less than 6 months, we’ll continue to have upward pressure on prices. If you’re waiting for homes values to start dropping, we’d need more than 20,000 more homes to suddenly appear in our MLS or more than TRIPLE the number of homes in our market! OR we could also suddenly lose 2/3 of our buyers. With Denver continuing to attract companies and as more people find out the greatness that is Colorado, there are no signs of buyers going away. Perhaps the new decriminalization of psychedelics will even attract more people here?!? It’s just too amazing for people to suddenly stop buying here – even as we become more crowded! Reminder, we haven’t seen a 6 month supply of homes in Denver since June of 2011.
With low inventory, we get low days on market. Our average days on market is still sitting at about 27days which is very low compared to January 2011 where we were at 111 days. And we’ve seen relatively no change in that over the last two years. As buyers have more selection to choose from, overpriced homes will sit on the market longer and we’ll see this average move on up. It is crucial that you hire a professional like us to ensure you’re pricing your home right from the start! This also makes NOW the best time to buy, even if you have something to sell or even if you’re “stuck” in a lease. You’re likely to save more on your purchase today than the few bucks you might get by waiting. If we act quickly, we’ll still be able to get you a great deal. But as prices rise those deals aren’t going to last.
So, what’s the bottom line?
We’ve had a strong Q1 and Q2 is following suit. The seasonal trends are holding strong and despite the nay-sayers in December and January, the market isn’t crashing. In some areas, we’re seeing a little bit of slowdown. In other areas, we’re seeing more activity! We’ll move to a buyers market eventually, but it’s not likely to be this year. And even when we do, prices will never be as low as they are today.
What will drive an inevitable slow-down? Interest rates going up (not likely this year) will make purchasing a home even more expensive in Denver. As home values continue to rise and wages stagnate, home affordability will continue its downward trend meaning fewer buyers can afford to be in the Denver market.
Job growth continues to bring well-paid professionals to Denver who can afford our city. We get lots of buyers from California and New York who think our prices are a steal!! Everyone from Texas thinks our property taxes are amazing! We still have too few homes available for buyers needing to buy. Meaning, we will continue to set new records for our average sales price. So, until people leave Denver or we build significantly more housing, we will continue to stay in a seller’s market. As the market adjusts, Urban Pro Homes will be watching to ensure our clients get the best!
Here are some of the key points:
Our total active properties remain very low. We’re even down from last year by nearly 5%! While we were up earlier in the year, it seems our this year buyers have outpaced our sellers. Due to the low inventory, buyers haven’t had the options they’ve needed, meaning our contracts in April were down 8% over last year.
Active properties are only low for detached single family homes. In the attached category (condos, townhomes, etc), inventory is up 27%!
Days on Market have also declined as they have previous years. We’re down to an average of 26 days or median days of 7. (At UPH, we’re at 5 days on both)
April’s average price (detached homes) has hit a new record at $541k!! Remember, since it typically takes 30 days to close, these prices were negotiated in January making this a trailing indicator.
We’re headed out of the compression phase of the year. This means we have maybe 1 more month or so of home values rising this year before we see the average value go down a bit. As a buyer, some relief is coming and some great prices are out there right now. Just be sure you’re doing your homework before you put in an offer. As a seller, be careful if you’re trying to time the market so you don’t miss the seasonal peak and accidentally hit the market overpriced.
Looking at ALL the numbers shows that this will likely be another strong year of appreciation with very little signs of slowing down.*
*If you’re thinking about a condo, either to buy or sell we should talk specifics.
Conrad SmithYour Real Estate Consultant
REALTOR®, BOLD, EcoBroker, CNE, CHRE, ILHM, KW Luxury
Professional Denver Real Estate for the Urban at Heart