The Real Estate Market

Numbers to know.

Denver home prices reach an all time high

In case you missed it, the single family housing market is on 🔥 ! February’s numbers are in and the median sales price jumped 11% from January and almost 23% from February 2020’s benchmark. In fact, this month’s median sale price has set an all time high for Denver City and County. With interest rates hovering around all time lows and outpacing buyer demand, don’t expect to see the rising home prices reverse until inventory increases dramatically. Until then, we will be on the edge of our seats, feverishly watching!

Want more detailed information about the market in your neighborhood? Please reach out!

The Top Denver Neighborhoods of 2020

What a year 2020 was! With everything that happened in the world unrelated to real estate, you would have hoped we’d be seeing numbers that are kinder (a.k.a. less expensive) this year. One word to sum that up: nope!

The Most and Least Expensive Denver Neighborhoods

We’ve all heard how expensive Denver is becoming. When we look at the stats for the entire Front Range, counties like Boulder and Clear Creek tend to skew the numbers. Dialing into just Denver County, we see that the median sale price (MSP) went up 9.1% in 2020, but some neighborhoods have seen an even higher increase. So, to answer the burning question, is Denver becoming unaffordable? I’ll let you decide…

  • The most affordable neighborhood (bottom of the list) rose 18.3% from 2019, to an MSP of $210,000.
  • Over 51% of Denver’s neighborhoods have an MSP greater than $500,000 (up from 45% of neighborhoods in 2019).
  • Only 43% of Denver’s neighborhoods are in the $250k-$500k range (down from 50% in 2019).
  • Just 3.8% of neighborhoods have an MSP of less than $250,000 (unchanged from 2019).

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Denver Neighborhoods that Appreciated the Most + Least in the Last Year

We ranked Denver’s hottest up-and-coming neighborhoods using historical price growth data. A newcomer to our MSP growth list in 2020 was Hilltop, at 28.9% above Denver’s county’s already high appreciation of 9.1% (total appreciation of 38.0%!). Hilltop’s appreciation was driven by its larger lots and high amount of home renovations and new construction compared to its peer neighborhoods. The word is also getting out about Clayton, which boosted its neighborhood appreciation by 25.6% (approximately $100k of appreciation).

On the flip side, Union Station was hit hard by the pandemic as large-building living became less popular and an influx of new listings hit the market. Other traditionally hot neighborhoods saw a cool-off as well, which was welcomed by buyers searching in those neighborhoods.

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How to win in Denver’s home bidding war

I’ve been saying it since the first week of January… “It’s like someone flipped a switch and turbo charged this market!” If you aren’t on the hunt for a new home, let me be the first to tell you it’s a crazy, crazy, crazy market with the sellers in complete control. I took a quick peek at the multiple listing service statistics today, and here’s what I found:

There’s nothing to buy.

In Denver County as of February 11th, 2021, there are 895 active listings for sale and 1,831 listings that are pending (under contract). In January, there were 889 property sales. That leaves us with one month of available inventory, one month! I’m concerned for February’s stats after seeing that massive pending number. For buyers looking for properties under $1 million, it’s a very frustrating time. There isn’t much to look at. 895 homes is 0.003% of the 338,341 total homes in Denver, per the US Census as of July 1, 2019.

The competition is stiff.

Buyers are showing their resolve to succeed in this market. I was recently involved in two separate negotiations that came in over list price; one ended up $50k over list price, the other $130k. Each negotiation had over 15 offers, and not one was at or under list price. In fact, January’s single-family close-to-list price ratio was 101.3%, so my experiences were not the exception, but the rule these days. While the reality of the market may seem disheartening, let’s take a turn and break down how you can succeed in it.

Competing requires strategy.

I’ve seen some very aggressive offers in the last 30 days. Below are some of the popular tools used to get your offer accepted, though it’s by no means a comprehensive list.

  • An aggressive initial offer.
  • An escalation clause.
  • Purchasing the home “as is” and limiting inspection asks to a low dollar amount ($1-5k).
  • Appraisal protection (gap) clauses that waive the buyer’s right to object if the appraisal doesn’t come in at the above list contract price.
  • Buyer paying seller’s closing costs.
  • Higher earnest money deposits with a portion of or all of it non-refundable.
  • Shorter close periods (2-3 weeks for financed purchases).
  • Free seller lease backs after closing to allow the seller to find a replacement home (good luck).
Buyers need a Plan B.

If you find yourself on the losing end of things, don’t give up! Backup offers are becoming competitive — I just experienced my first multiple offer backup negotiation (no joke). It used to be a slam dunk to get a backup offer accepted after the home is pending, but not anymore! Have your backup prepared and submitted as soon as you receive the bad news. Being quick to the punch when everyone else is sulking could make the difference.

Backup contracts are free insurance policies that don’t prevent you from submitting other offers on new homes that you find. In the event that the primary contract terminates (which they do), you automatically become the first contract with zero negotiations. If you find another home you like while you’re in the backup position (and can get it under contract), a simple email terminates the backup contract, and voila! The best part? No earnest money is required for backup contracts!

It’s easy to get discouraged in this market, and I understand the urge to just take the “blue pill” and sign a lease to ease the endless anxiety and disappointment. But I would encourage you to take the “red pill” and work the plan that you and your real estate broker created. The end result will be worth it. Stay the course!

2020 Denver Real Estate Market Recap

What a year — and that’s just in reference to the Denver real estate market!

Imagine you were flying at 45,000 feet, staring down at a hurricane, with its eye directly over downtown Denver and winds stretching across the Front Range. I know this sounds like a strange analogy for real estate (especially since we don’t have hurricanes in Denver), but bear with me since I majored in aeronautical science and minored in meteorology (think, former professional pilot and weather nerd, turned real estate pro). Back to the hurricane… the wind represents the fast-paced, single-family home market where homes have been selling in days (sometimes hours), prices are skyrocketing, and buyers are frustrated. Then, look over to downtown Denver — where the condo market isn’t fast and furious. Just like the eye of a hurricane, it’s relatively calm and clear. Those who’ve been following the condo market in downtown Denver can understand — it’s been very slow and experienced a price correction in the pandemic.

Alright, enough analogies. On to the stats!

Days on the Market

We started 202o off strong, in the 40-45 average days on market (DOM) range. Then, well… you know. After the pandemic started gaining momentum, inventory started to shrink and buyers that were committed to buying saw it through. The buying frenzy that followed pushed the average DOM down to the mid-twenties for the remainder of the summer, and into the fall.

Inventory

The initial decline of inventory that started in January leveled off, then inventory began to jump in mid-late March when the stay-at-home orders hit.

In fact, it peaked all the way up to 3 months, a level we haven’t really seen since 2013! What was interesting to watch (statistically) in the midst of the media’s doom and gloom, was what happened as-stay-at home orders began to ease. As soon as Governor Polis deemed the real estate transaction an essential service, inventory began to plummet, eventually dipping lower than one by year-end. Yes, less than one month of inventory!

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Denver buyer demand sets records

I guess November didn’t get the memo, because buyer demand is supposed to slow down! In Denver last month, there were 1,417 closed transactions recorded. To give a little context, the 10-year average for November is 914 closed transactions — buyer demand is up 55%! Couple that with active listings being down 19% from November 2019 and we have a whopping 1.1 months of inventory. Folks that are touring homes and getting their offers trumped know what we’re talking about. Being a buyer in Denver (with the exception of the downtown condo market) is tough, really tough. With low inventory, high buyer demand, and all-time low interest rates, buyers have to bring their A game!

Want more detailed information about the market in your neighborhood? Please reach out!

Denver housing market is building on previous highs

There are no signs that the Denver real estate market is cooling. In fact, it’s picking up momentum as we head into the slower months of the year. Sales volume is up, inventory is down, and the result is a 21% increase in the median sales price from October 2019 and a 5.6% increase from September. The biggest news to talk about is the 11.8% increase in median sale price for attached single family properties. In fact, it set a new attached record at $436,000, and it’s only the second time the attached MSP has been above the $400k threshold.  It seems that buyer confidence is reducing the gap between attached and detached homes.

Want more detailed information about the market in your neighborhood? Please reach out!

Downtown Denver real estate market offers opportunity

Overall, Denver is setting home sales records for soaring median sales prices, low inventory, and the number of homes sold. Tell that to someone who’s trying to sell a condo downtown†, and you’ll probably be met with a puzzled look! Since COVID-19 swept the headlines, living downtown has become less popular. The psyche of buyers looking to call downtown home have changed, and the statistics are backing that up. The downtown real estate market comprises a small percent of Denver’s overall monthly activity, so it’s getting buried by all of the records the rest of the city is experiencing. Here are a few stats we pulled from the downtown condo/loft market for September:

  • Median sale price is down 14.2% to $485,000, from $565,000 in September 2019.
  • The number of sales for September is down 60% from September 2019.
  • There was 4.3 months of inventory, up 21% from September 2019.

Just like the stock market, our housing market has sectors that are down while the overall market remains strong. Can someone say opportunity? Market reports are great, but keep in mind: they are broad in scope and usually give you the 30,000 foot view. The statistics that really matter are the ones for the neighborhood you’re looking to call home!

Want more detailed information about the market in your neighborhood? Please reach out!

† In this article, Downtown Denver includes the neighborhoods of Union Station (LoDo) and Central Business District. 

Summer is winding down, but the Denver real estate market is staying strong

Summer is winding down, but the Denver housing market appears to be continuing its momentum right into fall. Interest rates have inched even lower, tempting buyers who have been on the fence about buying during a pandemic. We’ve had the best August in the last ten years for the number of homes sold at 1,507 (the average number of homes sold in August since 2011 is 1,240). With tight inventory and a new all-time low interest rate, expect to see prices continue to rise along the Front Range for the foreseeable future.

Want more detailed information about the market in your neighborhood? Please reach out!

This market is hot, hot, hot!

If you were living under a rock and the first thing you read was July’s real estate statistics, you never would have guessed we are five months into a pandemic. The median sales price for a single family home continues to push higher. Buyer demand continues to remain strong, pushing down inventory and average days on market.

The buyer rush that occurred after stay-at-home orders were lifted is starting to hit the sold statistics. The number of homes sold has increased over 18% from last year and is nearly double the amount since before the pandemic hit! Add low interest rates to the equation, and you have a recipe for a seriously hot market taking us into the colder months.

Want more detailed information about the market in your neighborhood? Please reach out!

How the Pandemic is Affecting the Denver Real Estate Market

Our New Normal

COVID-19 has sent our market into uncharted territory. Since the start of increased COVID-19 precautions a few weeks ago, we have seen a significant decrease in showings in the Denver Metro area. This is in part due to buyers, sellers, and agents alike staying home to help slow the spread of the virus. With individuals and families facing financial hardships, we are also seeing buyers have to put their home-buying process on hold or even terminate on homes that were under contract due to loss of job or income.

Many sellers are also pausing all business until this subsides in the hope of slowing the spread, but also out of concern that showings will decrease given the situation at hand.

Governor Polis has issued “Stay at Home” orders for all non-essential businesses in the State of Colorado. For those of you who either have to buy or sell immediately, all real estate professionals have been deemed “essential” and are allowed to continue operating business while maintaining COVID-19 precautions.

There are many new guidelines being implemented by companies to ensure the buying and selling process can keep moving forward while also maintaining social distancing. Fannie Mae and Freddie Mac have issued new temporary appraisal requirements, allowing for desktop or drive-by appraisals. Many title companies are also implementing ways to close at home and electronically, or even “drive up” closings where there’s no need to get out of your car.

A Light at the End of the Tunnel

The federal reserve learned a hard lesson back in 2008, and that was the need to act quickly during times like this. Luckily, they did this time. The federal reserve is currently throwing everything they have to combat this. They have dropped the federal rate to 0, added another $700 billion in purchases, and have announced that they are going limitless. This means they will spend as much as it takes to keep businesses afloat. However, the most important factor is the containment of the virus. The sooner that happens, the sooner the economy can begin to recover and all of society can return to normal.

While we certainly don’t have a crystal ball, through all of this the Denver real estate market seems to remain strong. Many sellers are still receiving multiple offers, buyers are still actively searching, and Denver still has incredibly low inventory. These factors, alongside incredibly low rates, are still pushing Denver’s market forward.

What You Can Do

If you have to buy or sell due to personal circumstances (death, divorce, finances, etc.), if you are a renter who has received notice to vacate, if you have already bought a home and need to sell your current home, or if you have already sold your home and need to purchase your next home, you are still able to move forward with your buying or selling plans. Please feel free to reach out to any Love Your Hood broker to discuss your buying or selling needs and how to best navigate them at this time.

And of course, please stay home, and abide by government-issued precautions if you must leave your home.

If you or someone you know is struggling financially during this time and own a home, it is possible you have equity in your home that you could tap into. Talk to your financial advisor, lender and realtor about your options to refinance, take out a HELOC, or to sell if you need to. If you are having trouble making payments, talk to your mortgagee about payment forbearance as soon as possible.

Rest assured, Love Your Hood is taking COVID-19 precautions very seriously. Our heart goes out to all of the individuals and families who have been personally affected by this. At Love Your Hood, we truly love our neighborhood and those within it. If there is any way that we can support you or someone you know during this time, please reach out. We are happy to help.

All the best,

Your neighbors at Love Your Hood