With increasingly more opinions on Denver’s housing market there have been varying reports of exactly where we stand. Has Denver finally shifted towards a buyer’s market, or is the market getting even tougher on home buyers?
For the housing market as a whole, the numbers present a not-quite-as-strong-but-still-very-strong seller’s market. But, it’s not quite that simple, as agent Megan Aller stated in her recent Westword interview. Within the Denver market, we’re seeing the luxury market soften significantly, while the median-priced homebuyer almost always has to compete with multiple offers.
Days on the Market
2019 went out just as it started with regards to days on market, averaging about 37 days on market in Q1 and Q4 of 2019. There were fewer days on market during the busy spring and summer season as expected.
Notable here is that even with slightly less inventory than 2018Q4, 2019Q4 homes took longer on average to sell. This is a nod to our theme this year, the market is not quite as competitive for buyers, but this change is marginal.
Inventory in Q4 was lower than in 2018, with about 200 less homes in October, November, and December on average. This is largely due to new homes becoming available towards the end of last year and this summer. Denver reached its peak this September with 2,605 units on the market! As a result, sales last quarter were higher than last year. Since September of 2019 you can see inventory on a downward slope.
November was an interesting month. Compared to 2018, the median sale price is up quite a bit. But compared to October, there was a slight drop in price, which is to be expected. Home inventory is down, but the average time spent on the market is up. Buyers look to be becoming more disciplined in their decision making. Multiple offers are still happening, but only on pristine, well-priced homes in hot neighborhoods. Buyers aren’t just buying because they’re worried about getting left out of the Denver market! They’re more calculated with their home selection and are using statistical data to justify their offer pricing. As we close out the decade and begin 2020, we’ll keep a close eye on inventory numbers. If year-over-year numbers are significantly lower for the first quarter, buckle up and expect a wild ride this summer!
Source: Andrew Dodson of the Denver Business Journal
Beginning this January, real estate agents will no longer be allowed to market listings as “coming soon.” The driving force behind this? Agents will try to market to their network and score both sides of the transaction. This new rule creates an even playing field for all buyers and agents, but some brokers aren’t happy with the change.
Falling interest rates. Lower inventory. Higher sales volume. How much higher can prices go?
We’ve been reading again and again in the news about falling interest rates. Then, it finally happened: rates rose for the first time since October 2018. Does this mean interest rates are finally becoming stagnant? While the 30-year mortgage rate is down nearly 1% from last October, a small increase from September is notable. The increase can be partially attributed to a rising stock market and hints of a deal in the China trade war.
Denver home inventory was down 4.5% from last October while homes sales were up 9.4% for the same time periods. This equation has the potential to push prices higher during a season that typically sees steady to modest price increases. If you’re anticipating a deal during the winter season, keep an eye on interest rates. If they keep rising, you may see panicked buyers making rushed decisions in order to lock in a great interest rate.
It’s the time of year again where we talk about seasonal adjustments to the Denver housing market. If you’ve been paying attention to our monthly stats updates you might have an idea of where this is heading. Lets dive in…
MEDIAN SALE PRICE
Denver’s single family median sales price hit a record high in June peaking at $518,750. At first glance, you’re probably thinking that we’re heading into our seasonal adjustment — which you’d be correct to assume. One thing we will be keeping an eye on is how far we dip down during the winter months which could set us up for a really strong summer season.
Sale prices for two-bedroom homes are down a bit this year, while one and three-bedroom homes are posting a modest increase. The real story is four-bedroom homes, up $80k from 2018! The most likely reason: growing families and limited 4+ bedroom inventory are pushing prices sky-high.
The downward trend in interest rates continues. In fact, it has dropped every month this year; almost an entire point since last November. We’ve been spoiled over the last decade with steady, sub 4.5% interest rates. While we witnessed a small taste of rising rates early last year, people aren’t taking low interest rates for granted anymore. Buyers want to capitalize before the trend reverses again.
DAYS ON MARKET
It’s still a seller’s market in Denver, but buyers are able to take a little more time to decide on a home. We would to expect to see increased inventory until the first of the year as buyer’s take a break from their search during the holiday months.
Inventory is slooowly continuing to increase as the year progresses. The real test is whether the trend will continue next spring. Will sellers sitting on the sideline for the last several years finally be confident they can find a replacement home after they sell?
The good news is that active listings are up compared to the previous four years. The bad news is that we need even more in order for it to have a significant impact on home affordability along the Front Range. We still have a ways to go before we get to a balanced housing market.
Rising national unemployment, declining large purchase sales and tumultuous securities markets have some economists forecasting a recession. Despite this, Cushman & Wakefield managing director Jon Hendrickson feels that safe lending practices and Denver’s growth in jobs show a recession is not near.
Hendrickson distinguishes recent recessions from today’s market condition, and why Denver is one of the top markets in the company in the full article.
Home sales slowed this August as the summer nears its end. In July, we saw high sales volume and sales price. August had a large dip in detached home median sales price while attached condos, townhomes, and duplexes rose in median sales price. Interest rates continue to fall, the lowest they’ve been since October 2016! The star player in Denver’s home market continues to be inventory, with the highest number of August active listings in the last six years. This is resulting in homes spending more time on the market, and lower home prices.
July brought scorching heat and a housing market to match! Almost 15% more homes were sold this July than last, and the median home price was over 5% higher.
The average days homes in Denver spent on the market was 27 this July, significantly higher than July of 2018. While Denver’s housing market is still a sellers market overall, with 1.8 months of inventory, the surge of luxury high rises in Denver has swung the luxury condo market favor back to the buyers. The Denver Metro Association of Realtors’ July report shows 5.6 months of inventory for attached homes priced between $750,000 and $1 million.
Interest rates crept downward again this in July and the median home price was slightly lower than last month offering a bit of relief to Denver area buyers.
Although the market remains in the favor of sellers, it’s not all bad news for buyers. Lower interest rates and a higher number of listings mean it’s a good time for buyers to talk to their lender and start their hunt! Good news for sellers comes in the form of the highest median price for a detached single family home, ever!
Days on the Market
In June 2018, homes in Denver lasted an average of just 18 days on the market. Buyers who aren’t quite ready to make a decision have a slight advantage over last year, with an average of 24 days before a home is sold in June 2019. However, the summer is certainly heating up as this is the shortest time on the market we’ve seen homes sitting in 2019 thus far.
And while the market is speeding up this summer, on a year-over-year basis, it’s starting to slow since it’s fastest pace in 2015.
Denver remains a seller’s market for the seventh year in a row, with an average just shy of 2 months housing inventory as we head into July. The news isn’t all bad for buyers, though – the city was up to 2,451 active listings in June. The last time buyers had this many options was back in October of 2013!
Last month we watched housing prices jump above $500k, just as they did for the first time in April 2018. Yet, even though prices are still sky-high, we’re living in a market that is stronger than last year and also friendlier to both buyers and sellers. How so?
Buyers are benefitting from lower interest rates (down .5 percentage points from last May), more housing inventory (36% more homes for sale), and a smidge more time (roughly half a week more) to see properties before they’re snatched up.
Sellers are benefitting from — wait for it — prices staying high.
Excluding a national event that would radically change the housing market, the demand to live in Denver continues to keep housing prices high. The U.S. Census reported Denver among America’s top 10 cities in overall population growth between 2017-18, with an increase of 1.5%.