COVID-19 has slowed down several markets and industries but not the Denver housing market. Home prices in metro Denver are continually rising, with homes flying off the shelf as soon as they appear on the list.
According to a recent study by Zillow, 30% of properties sold in September costed more than their list prices and doubled its year-over-year percentage from 14.4%. As one of the top five largest metros in the survey, Denver’s new record surpassed the national average of 22.4% for homes sold above lists price.
Most of the Denver homes captured in this survey cost the buyer at least $15,715 above their list price.
The survey shows that competition and bidding wars were high for properties in the lower-middle fifth category. These include homes with prices ranging between $354,990 and 430,000.
The study reported that 44.5% of homes sold within this price range in September went for more than their list price. Approximately 19.15% of high-end properties listed in the top fifth market category also followed suit.
Market trends and activities in October
Factors such as receding inventory levels coupled with high demand and quick home sales fuel these above-list home offers. Denver’s active listings for both attached and detached single-family properties at the start of November were4,821. The Denver Metro Association of Realtors (DMAR) quoted this figure as a 9% decline from September and a 43.7% decrease from a similar time in 2019.
Homes throughout October took 24 days on average in the local housing list setting another record low. Detached single-family houses sold at $519,900 in October, shooting its median closing price by 14.26% from last year’s worth and 1.94% the previous month.
Real estate analysts have correlated the current imbalance in seasonal housing market patterns and escalating home prices with the continued interest in both buying and moving. They further caution that if the current inventory shortage, record-low mortgage interest rates, and the rising demand persist, we should prepare for an extremely competitive housing market with more transactions going to 2021.
The Zillow report links the current growing housing demand with buyers’ behavior keen on locking inlow-interest rates and the chance to work from home.
How low mortgage rates is shaping housing market trends and behaviors in Denver
One of the pandemic’s effects on the real estate market was low mortgage interest rates that meant reduced monthly payments. This reduction gave buyers a strong incentive to buy homes throughout the nation, even with the rapidly increasing Denver home prices through last summer.
The DMAR reported that Denver-area experienced a 12.1% yearly increase in the median home price of the single-family apartment sold in August. This led to a 7.5% up in yearly appreciation rate compared to July.
According to LendEDU’s survey results, 54% of individuals that bought homes during the pandemic admitted to taking advantage of the low mortgage rates, 15% were escaping hard-hit regions, and 24% didn’t cite outbreak in their decision.
About 55% of those who said that the pandemic influenced their decisions regretted buying new homes at this time due to economic uncertainties. Thirty-percent of this lot admitted to struggling financially after the purchase.
Is the Denver housing market affordable?
The Denver housing market is currently facing a severe deterioration in affordability, meaning that the pool of buyers might shrink to none at all. Another study by Zillow reports that about 61,321 renter households in Denver can afford a starter home elsewhere but continue working in Denver.
This accounted for more than 14% of Denver’s total renter households and was the fifth-highest rate from 50 different large metros surveyed. This implied that if remote work were to become a long-term alternative, it would reshape the entire housing market by increasing homeownership to most tenants living inexpensive parts of the nation.
With more people still moving to Denver from other denser populated cities like New York, housing research shows that Denver is yet to experience an unusual influx in its population. This surge implies that housing demand in the Denver housing market will exceed its supply for a while.
This means that Denver’s rising home prices don’t rely on mortgage rates so much and could last through the first quarter of 2021. With a 3.7% rise in price this year, attached residential buildings (condominiums and townhouses) still offer cheaper Denver payments. Analysts are keen to see if this will change going into 2021.