The seasonal trend that’s held true for the last 7 years is still holding true today. We have more total homes on the market in the Denver Metro area, but most, if not all, of the increase is in attached properties (think condos, townhomes, duplexes, etc). Home values are still going up and we’re starting to see the values ease up a bit. If you’re a buyer right now, you may be feeling pretty decent about what’s happening! And if you’re a seller, you might be feeling a bit nervous. Your specific situation will determine what your next steps should be.
Affordability will be what slows our market down… eventually. For those saying, “Prices can’t stay this high!”, history disagrees. As homes are less and less affordable, fewer buyers will be able to purchase them and this will put downward pressure on prices. Our market is 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.
For sellers, NOW is the time to get on the market before you have much more competition. I can have you listed in just a few days!! (But we prefer a few weeks.)
I still think we’ll end up with around 7% appreciation again in 2019. Waiting to buy isn’t saving you any money. 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 either. 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. Even local news is more about creating articles for clicks than it is about reporting clear facts. 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 staying strong! Denver continues to push values higher and higher. We’re up 5.7% from the same month last year. Since this is based on prices that were negotiated in April, this is a lagging indicator of our market and I don’t give it much weight. We typically start to see values drop just a touch this time a year since our supply goes up faster than our demand. So, at $511,845 in Denver and $465,612 in our MLS, we’re still an expensive city to buy in. In Denver, our values decreased a touch, and in the Metro area, we went up a touch. This is expected as the Average Sold price will be leveling slightly and even come down a little as we move through the summer months. This makes now a great time to move up into something bigger!
For new listings hitting Denver’s market in May, we see that we’re up 11.6% over May last year with 2,122 new listings hitting the market in Denver and 10,870 new listings in the entire MLS! We’re also up from last month in both areas. We’ll see these numbers continue to move up 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 2,100 new listings cometothe Denver market; we put 1,771 of those listings under contract. So our buyers are not quite keeping up with the new listings. The relationship between new listings and under contract properties is what drives our market. This is a typical seasonal shift in the market.
So, while sellers are slightly outpacing buyers, our total active listings are up overall. In Denver County, we’re around 10% higher over last month at 1,886, but 28% more than last year. In the whole MLS, we’re about 3% higher at 10,377 and 27.5% 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.
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 1.9 homes per buyer to choose from. As we’d expect, this is slightly more than last month. 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 nearly 20,000 more homes to suddenly appear in our MLS or more than TRIPLE the number of homes in our current 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. 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 over 30 days 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. You can see above that the Median Days on Market has gone up quite a bit since the beginning of the year, sitting at 12 days for the whole MLS. 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?
It’s a Seller’s Market. And, it’s a slightly less good seller’s market compared to our most recent years. With Q1 being so strong and Q2 following suit, there’s no reason to think a significant decline in prices is going to happen anytime soon, if ever. Most likely, these are the cheapest prices you’ll ever see in Denver!! 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 bit of slowdown. In other areas, we’re seeing more activity than ever! We’ll move to a buyers market eventually, but it’s not going to be this year. And when we do finally get back to a buyer’s market, prices will get as low as they are today.
What will drive an inevitable slow-down? Interest rates going up (not happening this year… if anything they’ll go down again) 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. And yet, we’re starting to see signs of wages going up. Low-interest rates and wages moving up will continue to support our seller’s market and delay the transition to a buyer’s market. Meaning, STOP WAITING TO BUY! 🙂
Here are some of the key points:
Summer months (May, June, July, Aug) is when we see the peak in activity for the year.
Just because we have more activity, doesn’t mean prices go up. It’s about the relationship between the # of sellers (supply) and the # of buyers (demand). Not the number of total transactions.
Our total active properties remain very low. We need 20,000 MORE homes on the market to get us to a balanced market. We’re not there.
Active properties are lowest for detached single-family homes. In the attached category (condos, townhomes, etc), inventory is up, and in some cases nearly to a balanced market!
We’re in the period where we see the average values go down a bit. As a buyer, some relief is here 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 of your pricing and stay in front of the market instead of trailing it for the rest of the year.
Looking at ALL the numbers shows that this is turning out to be another strong year of appreciation with very few 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