Denver Metro Housing Reports

Comparatives are funny because they can tell any story you want. The market is slowing down? The market is still nuts! The idea real estate is hyper-local is at its epitome in times like these. Nicole dives into the Denver Metro local numbers and a bit about the economy but let's start with a story because perspective is everything."One of our clients this past weekend put in an offer and the listing agent and friend, Maura Putnik, called me and shared the seller side experience.
Her $890,000 listing had 80 showings, 18 potential offersSix of those retreated when they heard where the price was headed, 12 written offers of which a few improved their offer, to have that one get the deal. In addition, four agents offered to submit a backup."

The July DMAR Market Trends data was released this week, and there are two notable trends. First, when comparing 2021 to pre-covid 2019, our seasonality is falling back into normal ranges. We have a healthy influx of listings which were up 8 percent, 2 percent more homes went under contract, and there were 7.5 percent more closings when compared to 2019, yet we continue to see three times the price growth. If I return to our current month-over-month or year-over-year and stop there, we are bleeding red.
But the real story is in the green. Green month-over-month active listings are eluding to hope that more balance is on its way, yet green double-digit annual closed prices say that balance may not arrive too quickly. The second trend that stuck out is that year-to-date, homes priced over $500,000 are flying off the shelves compared to 2020 and 2019, with more homes at higher prices coming on the market, going under contract, and closing. Year to date 54 percent of all homes sold in the Denver market were over $500,000. In July, that number spiked to 74 percent. Where did all of the under $500,000 priced homes go?
 

Buyers and sellers are exhausted by the extremes. Nationwide, new listings are up a strong 5.5% year over year and an even more impressive 11% from last month.
In the Denver Metro, our new listings were up 6% from last year, and 24% from May. This added 7,826 homes to the Denver market last month, lifting our 2,000 active listings to a less than healthy, but certainly welcome 3,122 at the end of June. That's a 50% lift in one month, although it's still shy of a healthy market.
The average active listings for June is 16,098. Days on market is still 4 for both detached and attached.Mortgage purchase applications dropped to a 5 month low. Pending home sales slowed down to a 2% gain from last month's 17% month-over-month increase.

The second half of May seemed to open up a bit. But, sorry, it was a false peak. Less inventory came on the market and more buyers went out looking for it. Inventory was down 6% from last month, and down 14% from last year inventory.
6718 homes went under contract, which was up 17% last month, and up 3% from last year.Active listings dropped last month. In fact, there was a 20% drop and inventory fell below 2000 homes for sale the second time this year. Listings are spending and average of four days on market.
You have to be ready to pounce, offer 30K over asking, without any contingences and ready to close in 2 weeks.
26% higher close - higher end homes.23% higher close -medium priced homes.$700,000 average closed price detached.
We are nowhere near the peak. Same with rates. Rates turned up mid-month.Inflation jumped 4.2% - the highest in 13 years. Core inflation jumped to 3%. This was the highest monthly gain - EVER. Get the rest of the insights by listening to this 9 minute episode. More false peaks are expected.

While the economy roars back to life, real estate continues to be judged.DMAR tells us that 2594 for sale - a lower than low figure. The previous low was 2015 with around 2400. Listen in for this recap.
The months of inventory is currently  .51 months for detached homes, and detached inventory is currently at .46 months.
Detached homes' median price is $585,000 in 11 counties, whereas attached are at a $376,660 median in 11 counties.
With a substantial equity cushion, the Denver Metro area has been able to avoid the dreaded and predicted bubble.
2.5% of area homeowners have less than 10% equity, and 1.5% in the same region have negative equity.
Builders have customers, but because lumber prices up 25%, steel up 160%, sheet goods up 400%, this has put a crimp in their ability to build homes ahead of inventory demands.

Let's start with strong demographics. 33% of home buyers today and for the next decade are first time home buyers with nothing to sell, taking from an already stressed market with nothing to give in return. At the other end of the spectrum baby boomers are delaying their downsizing, moving into assisted living nursing homes, or in with family due to their heightened pandemic risk, holding onto those homes younger families need. For new builders NAHB noted lumber continues to spike up with futures up another 35% on top of the already high 170% rise we saw over the last 10 months.

There are things I know, things I wonder about, and things that boggle my mind.  Here are a few… I knew demand was about to explode before 2020 began. Demographics told us that.  8.8 to 9.2 million first-time home buyers were coming and they wanted a piece of the American Dream. With the largest age cohort numbering over 23 million, Americans aged 25 to 29 are looking to start families and buy homes.  And once someone has a child they are twice as likely to purchase a home. 
I knew that a recession was coming, or at least I was pretty certain. America was on a Recession Watch at the end of 2019 and beginning of 2020 tracking slowing manufacturing, shipping, business spending, and job creation as well as declining consumer confidence, talks of trade wars, and political unrest. The two and ten-year yields had also inverted pointing to a longer-term financial instability.

DMAR’s December Market Trends Report was released this morning and provided numbers supporting what we already knew. Demand is strong! Inventory hit an all-time low of 3415 active listings at month-end. Compare this to the average active listings for November month-end of over 14,000 and a happier place of 6,000 units.  Sellers are exceeding the typical seasonal holiday slowdown of decreased supply. The added fears of job security, prospective buyers entering their homes, and finding a replacement home are adding to their resistance to sell. Potential Sellers are also starting to face what will become more widespread, something called rate lock where the appeal of staying in their current home with a lower rate and monthly payment will outweigh their desire to move. We will continue to see tenure increase from its current average of 10 years as well as homeowners holding onto their primary homes with low-interest rates and choose to convert them into rental properties.

November’s DMAR report highlighting October data reflects just how important the home has become by producing nearly as many records as we saw in last month’s report. Now is not the time to sit on the sidelines in fear that the bubble will burst; it is the time to stay engaged. Finding the right home might be challenging, but waiting will only cost you more.

It’s become infinitely more important as it’s our refuge, our workplace, classroom, meeting room, restaurant, escape and for some, our isolation. The Denver Metro Association of REALTORS® (DMAR) October Market Trends Report highlights how this resurgence in our home has played out in the stats. 
We have the lowest amount of homes for sale for any September at 5,301 homes, which consequently is only a mere 950 homes more than Denver-area’s all-time inventory low
Buyers put your sneakers on because homes are selling in six days, the fastest for any September on record
Be ready to pay more. Denver’s median closed price hit a record high at $461,000. Consequently, that’s more than the sellers were asking, as the close-to-list price for September was 100.41%
Even with this low inventory, we sold 5,850 homes, more than any September on record
With another record 6,376 pending sales teed up for October
Sellers, I see you are trying. 6,376 new listings came on the market; but with demographics and interest rates favoring buyers, it simply isn’t enough