The global pandemic has been turning 2020 into a pretty strange year. There will probably be asterisks next to many of the numbers posted for this year with a footnote saying “COVID-19 pandemic”. We’re still waiting on a few metrics to catch up to give us a more detailed picture of the impacts COVID-19 has had. However, as we look at the leading indicators, we can already see that our market has been recovering quite remarkably. The first quarter was moving fast and gave us a ton of momentum. It was exactly what we needed to fair well during the “Stay-at-Home” order. Since we’ve basically caught up to the number of sales we’d expect sans-covid, I would think our market will go from hyperspeed to something more normal. In any event, it’s important you’re working with the right agents (Crystal and me) to ensure you can take advantage of the market to accomplish your goals.
Have you been thinking about buying? If your income hasn’t changed over the last couple months OR it’s back to pre-COVID levels, now might be the perfect opportunity. With interest rates so low, now could make a lot of sense! If your income has been impacted, once it’s back to normal, we’ll only need 1 paystub to get started. Even if we miss the ideal time to jump into the market, you’ll have great agents (Crystal and me) to increase your odds of winning your favorite home!
Homeowners, have you ever thought about selling your house? Your listing strategy will vary based on your goals, timeline, and your home. If we list now, we’ll probably have offers to choose from! We’ll put you through our virtual home selling program and ensure you’re being exposed to ALL the buyers, even the ones still sitting on the couch! If we wait, we might not get quite as much, but we won’t be paying as much on your replacement home either. Either way, we should chat today so I can explain the different strategies to when you sell so you can make the best decision for you and your family.
Share your real estate goals with us and we’ll tell you exactly how to 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.
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 or New York, would you? You shouldn’t get your real estate updates from outside sources 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 headlines for clicks than it is about reporting clear facts.
That’s why it’s great you have a friend in real estate! I take the local numbers and break them down to help you 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.
We continue to have a strong showing in real estate this year despite COVID-19 and the Governor’s Stay-at-Home orders. ? We’re quickly catching up in our average YTD total closed units and we’ve already caught up (as of right now in mid-June) to our average YTD total units put under contract. Buyers are still buying homes, inventory is staying low, closings are still happening, and values are holding strong. We’re still up 2.7% in Denver from the same month last year. Since this is based mostly on prices that were negotiated in April, this is a lagging indicator of our market and I don’t give it much weight. We’re down ever so slightly month over month in Denver and our MLS at $525,698 and $480,313 respectively. So, the average price dropped $1-2,000. Not exactly the big savings some buyers have been hoping for. And based on the most recent activity, I’d bet prices are back up and then some next month! Our values are staying strong.
As far as new listings hitting Denver’s market in May, we see that we were down 10.2% over last year with 1,909 new listings in Denver and that’s 700 more than last month. We’re down 16.3% from last year in the entire MLS with 9,115 new listings in May. These are much better numbers than last month, but certainly not enough to make a serious dent in our demand.This is one side of the coin that drives market values.e price dropped $1-2,000. Not exactly the big savings some buyers have been hoping for. And based on the most recent activity, I’d bet prices are back up and then some next month! Our values are staying strong.
In the same month we saw 1,909 new listings come to the Denver market, we put 1,739 listings under contract. So the sellers outpaced the buyers by only 170 properties in Denver! And that’s only down 1.6% over last year. The relationship between new listings and properties put under contract is what drives our market. Be aware, this doesn’t account for all buyers searching… just the ones who had their offer accepted. Our days on market, % of homes selling for over asking price, and even % of homes selling in 7 days or less tell us that buyers are trying to buy, but many of them are being beat out and are still searching. In the whole MLS we had 9,343 properties go under contract with only 9,115 new listings. Our buyers outpaced our sellers by 228 properties. That’s UP 5.9% over last year. I think the bigger story here is how we’re down 10-16% in properties coming on the market, but we’re either flat or UP 6% on purchases. That’s not good for our current buyers who are looking for something… it just means they’re competing more!
In Active listings in Denver County, we’re sitting at 1,971 listings which is relatively flat compared to the last few months.The whole MLS is a bit lower, but not by much, relative to previous months at 10,476. We’re just not seeing the inventory we need in order to get out of this extreme seller’s market.
OK, now for the number to watch–“Months Supply of Homes” or “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 stay flat. Currently, we have 1.80 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 about 55 days. While that’s not quite as extreme as 2 years ago, it’s actually still a VERY strong seller’s market. Call me to start selling your homes!!!
While this may be the one of the highest months of supply we’ve seen since July of 2014, you can see we’re still in this extreme Seller’s market AND it’s heading down, not up! 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 there to suddenly be over 37,000 homes in our MLS. We have just over 10,000. OR we could also suddenly lose 2/3 of our buyers. Despite what’s going on with the pandemic, we’re just not seeing those kinds of changes. People will always need a place to live! 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 sitting in the high 20’s, which is very low compared to January 2011 where we were at 111 days. And we’ve seen relatively little change in that over the last few years. Buyers had even less selection moving through Q1 giving overpriced and uglier homes a better chance of selling despite their shortcomings. We’ve seen a small flood of buyers come out of the statewide Stay At Home orders which has created a late push in our market. But it’s likely too little, too late to catch our market up to the anticipated appreciation we expected this year. That, along with historically low interest rates, is giving buyers a small bit of reprieve. And, as a seller you can still price yourself out of the market. (No one is willing to pay $500k for a $400k home). As you move up in price range, the days on market go up quite a bit. (There are some luxury price points that are in a Buyer’s Market right now.) As you can see in the chart above, the Median Days on Market has almost doubled since mid 2018, sitting at 14 days for the whole MLS and 12 days in Denver. It is crucial that you hire a professional like us to ensure you’re pricing your home right from the start! We typically, 90% of our appreciation for the year happens between Jan 1st and the beginning of June. We seem to have “flattened the curve” this year, causing this 2nd “post-lockdown” push in values. With interest rates so low, you’re likely going to save WAY more on your purchase today than the few bucks you might gain by waiting. If we act quickly, we’ll still be able to get you a great deal. But as things continue to head back towards normal, prices will rise again and those deals aren’t going to last.
So, what’s the bottom line?
It’s a Seller’s Market. It was a Seller’s Market before the pandemic and it’s going to continue to be a seller’s market for the rest of the year and probably next year too. We know that at this point it’s unlikely 2020 will be as strong of a Sellers market as 2018. It’s appearing to be more like the “slightly less good” market of 2019.
The reality is, the pandemic slowed our market down for a moment. It’s more like we hit pause for about 45 days. Once we unpaused, buyers came out with a vengeance and we’ve basically caught back up. Even as I track the weekly leading indicators, we’re not seeing enough movement to suggest a substantial decline in prices. And there’s no reason to think a significant decline in prices is anywhere on the horizon. To be frank, these are probably the cheapest prices you’ll ever see in Denver!! It’s crazy to think about, but look at buying today like buying in the mid 90’s. Don’t you wish you owned real estate from back then? In some areas and some higher price-points, we’re seeing a slowdown, but not a downturn. In other areas, we’re seeing more activity than ever!
We’ll get back to a buyers market eventually, but not before the election. And when we do finally get back to a buyer’s market, prices will never get as low as they are today. If history holds true, prices will only flatten for a couple years before taking off again! When will that start? If I were to speculate, I’d still say we have at least another 14 months and possibly 2 years or more. That means, if you don’t own now OR if you’re looking for a change, then if you act now, you could have two more years of great appreciation before prices level out for a few years! Bottom line, the quicker you get in your next home the better off you’ll be.
What will drive an inevitable slow-down? A second wave of COVID-19 combined with an extended lock-down could have an effect. However, we already figured out how to work in this “new norm” and while people may be able to push pause on their housing needs for a moment, it doesn’t seem like they will just stop. Interest rates going up will make purchasing a home even more expensive in Denver. That’s not happening until after the election… and probably not this year at all. 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. It’ll be interesting to see how wages fair post COVID-19. Low interest rates and gains in wages will continue to support our seller’s market and delay any transition to a buyer’s market.
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