Low Inventory

Only One Month of Housing Inventory in Denver!

The story remains the same: no inventory!

When I say “no inventory,” I mean that we are consuming homes as fast as the market is producing them (1,429 new listings vs. 1,416 sold units in August). We typically see a reduction in active listings around mid to late fall but not during the summer months. Active listings for August were nearly as low as what we saw this past May. Buyers who were searching back in May suffered through several offer rejections before they were able to get under contract.

It’s not all doom and gloom though! 30-year mortgage rates continue to decrease, homes are taking a few extra days to sell, and the median price dipped slightly from June’s highs.

Pro-tip to buyers: keep your guard up, and treat every new listing like one that will be gone on Monday. Rely on your broker’s offer recommendations and don’t forget the competitive market clauses as a free insurance policy in the event that the home you are submitting an offer on is “the one.”

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Is the housing market slowing down in Denver?

The current catchphrase in Denver’s real estate market is “market shift.” While my day-to-day observations agree with that, the statistics aren’t necessarily reflecting a shift!

Denver’s median sale price dropped $10k to $650,000 since June, which could indicate the start of a slowdown or it could be an early seasonal cool-off driven by a super-hot spring and early summer sell-off. Inventory remained unchanged from June, but days spent on the market dipped to 13 — the lowest it’s been since we began tracking it in 2007! One thing to point out is the majority of July’s closings are from contracts that were signed in June, and June was still a super-hot month. August’s numbers should be interesting and we’ll definitely be chomping at the bit to analyze the data as soon as we can!

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Denver Real Estate News Recap: June 2021

Here’s a quick digest of what happened in Denver real estate last month:

+ April proved to be a record-setting month for Denver annual home appreciation — a whopping 15.4%.

+ Showings are down and bidding wars begin to tame in Denver’s real estate market. Will buyers start to find relief or are some walking away from their search after high price fatigue?

+ Colorado is on the verge of an affordable housing crisis so severe that it could derail the state economy and contribute to a significant deterioration in the quality of life for those priced out of the market. The Common Sense Institute released a white paper on actions to reduce the shortfall.


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Questions about the Denver real estate bubble that keep us up at night

How long will our fierce, low-inventory, deep seller’s market last? Will it slowly ramp down or will it crash overnight? Are we keeping up with new construction? These are the questions that keep real estate professionals and home buyers up at night!

How is inventory looking?

Every day I look over new homes that hit the market for our clients, a task that used to take up the length of a nice cup of coffee. Now, I can’t even finish my coffee before I run out of properties to view! Over the last seven days, there have only been 204 new listings in Denver and 411 have gone pending. Typically, we measure inventory in months, but we are just shy of 40 days of inventory — days! Denver had 318,445 households as of 2019. An average of 29 homes hit the market each day, which means that only .002% of Denver households are hitting the market each month. Things are certainly tightening up.

How are rising interest rates affecting the market?

As interest rates go up, buyers in the lowest price ranges find themselves forced out of the market. As more of a monthly payment goes toward higher interest rates and not towards purchase power, everyone is shuffled down the totem pole. This reshuffling will reduce buyer demand, but not enough to reshape inventory and get us to a balanced housing market. To significantly increase inventory levels to quell increasing prices, work must be done on the supply side of the equation.

(P.S. We’ll be keeping an eye on the 10-year treasury rate, which mortgage rates have historically been tied to. Glen Weinberg at Fairview Commercial Lending recently published a great write up on the recent inflation jump reported on this month’s CPI Index report and what that means for real estate.)

Can we turn to new construction?

This is where Denver has a severe disadvantage to other cities where “urban sprawl” is an option. Denver is locked in by other municipalities and unable to develop large tracts of land. We aren’t the only city with this problem; as a nation, home building has dropped significantly over the last decade, from an average of 26.3 million homes built per decade from 1970-2010, to only 5.8 million new homes built from 2010-2019. That’s a 77.8% change in the wrong direction! Denver needs new homes to add to the inventory to supplement existing home sales. The city can’t build out, so we have to build up. Increasing density via high- to medium-rise condominium development and finding a compromise to construction defect laws must happen.

Will the market crash?

Lending practices have been corrected since the great housing crash of 2008 and those buying homes are now generally well-qualified. As interest rates increase, I do believe things will start to slow down, but not crash. I mean, we are living through a pandemic that has rocked the world and our housing market is still going straight up! Now, we just need homes to build upwards as well.

U.S. Real Estate News Recap: February 2021

Here’s a quick digest of what happened in U.S. real estate last month:

+ While inventory has remained low, 5.64 million homes sold in 2020, the most in the last 13 years.

+ New-home construction activity soars to its highest level in over a decade, as single-family homes drove the growth in both housing starts and building permits.

+ The America at Home Study found that COVID-19 has shifted the motivation to buy a home as well as the trade-offs renters are willing to make to buy a home.

 

 

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Denver Real Estate News Recap: February 2021

Here’s a quick digest of what happened in Denver real estate last month:

+ Denver’s widespread broadband access, wage growth, and booming tech industry placed us as the 11th best-performing large city according to Milken Institute. Rising housing costs could hamper our future performance.

+ As the Denver metro area becomes the most expensive outside of coastal areas, first-time homebuyers have a tough time landing their first place. With a 32% decline in available listings between the third and fourth quarters of 2020, the 2% decline in average list price isn’t helping enough.

+ The number of homes for sale in Denver is at 14.9% the average amount for the end of February. This historically low amount is causing listings to sell in a median of five days, compared to 15 days a year ago.

 

 

Have questions about what’s happening in real estate in your neighborhood? Let’s chat!

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