It is one of the most turbulent and confusing times in the history of real estate markets across the world. The Denver residential market has had to struggle with low inventories and decreased interest rates, as part of its test by the coronavirus pandemic.
Hundreds of homeowners pulled off their homes from listings at the beginning of the pandemic in mid-March. Subsequent stay-at-home orders further resulted in huge inventory shortages throughout Denver in April.
A steady rebound closely followed in May and led to the increased month-over-month pending sales rate in June. The Denver housing market is now unusually busy as more buyers are competitively looking to take advantage of the pent up demand coupled with low-interest rates and bid on the few available properties.
Even though the pandemic started in mid-March, its impacts on the local real estate market were felt in April when the Denver metropolitan area recorded a 30.78% year-over-year decline in closed sales captured by the Denver Metro Association of Realtors’ report. The market also reported a 37.82% year-over-year drop in new listings and a 45.79% decline in pending contracts.
Despite the adoption of strategies such as frequent house disinfections and virtual house tours, the market was further shaken by the pandemic and forced over 3000 property management and brokerage businesses to sign up for Paycheck Protection Program loans.
In-person showings started to resume right after the relaxation of the set restrictions and resulted in a 56.4% month-over-month increase of new listings throughout May and an overall increase in pending home sales.
Despite the 33% drop in year-over-year active listings throughout June and a general struggle for inventory, the Denver real estate market’s momentum carried through July.
The July market analysis
According to the latest report released by the Denver Metro Association of Realtors, the local real estate market trends recorded another record high in terms of sales throughout July. The high number of pending sales (houses under contract) in June fueled the all-time high closing record last month.
The Denver housing market has proved to be slightly unshaken now that there are more cash buyers ready to buy homes at 30% over the asking price. This explains the overall increase in median home prices for single-family properties to at least $600,000.
Despite the interruptions by COVID-19, the Denver area surpassed its 2017 record high by a 7% margin in closed sales last July.As of mid-July, Freddie Mac recorded that the average mortgage rate for a 30-year-fixed property dropped below 3% for the first time in 50 years.
The new record low mortgage rates combined with the increasing in-migration rate to Colorado, are great contributorsfor the growing demand that is now forcing buyers to bid past the asking price on several properties.
Single-family homes recorded a 7.68% month over month median price increase as well as 9.92% year-over-year turnover. With its new record high of $601,863 in median home price value, experts are now characterizing the Denver housing market as a seller’s market.
What to expect next
CoreLogic compiled and released a different market report for Home Price Insights in early July and categorized the Denver residential real estate market under the most overvalued housing markets in the nation. It further predicts that home prices would drop by a 9% margin throughout Denver metro for the rest of the year up to May 2021.
This forecast was initially based on unemployment levels and since this rate is decreasing, now CoreLogic forecasts a steady growth in home prices for the rest of 2020, possible stagnant, and /or price declines by spring 2021.
The pandemic has made it difficult for experts to make viable predictions, as this would depend on the severity of subsequent waves and the length of the recession period.Real estate analysts now agree that the housing market trends in Denver henceforth will greatly rely on the trajectory of the COVID-19 pandemic through the remaining two seasons.
The bottom line
The Denver Metro Association of Realtors’ report also acknowledged that Denver is still one of the popular destinations for most Americans and records that homeownership in the city is at a nationwide 12-year high. Even though the increase in home prices and the constant declines in interest rates are now helping the market to bounce back, those buying are urged to be more patient when searching for the right home. With the low inventory now, buyers will need to move very fast whenever a house of their choice pops up in the market.