Since summer began, the Denver real estate market has mainly been a for-sale kind of demand, and October wasn’t any different. Throughout this month, market activities were defined primarily by low house inventory, tight bidding wars, and escalating home prices.
The increasing number of anxious homebuyers interested in Denver Metro consequently fueled record-level home prices in October, forcing many to settle for highly unfavorable terms while trying to beat the competition for the few listed homes.
According to the latest Denver Metro Association of Realtors’ Market Trend report, October saw some record-breaking trends with wins for both buyers and sellers.
The Denver real estate market saw a record-low of 9% month-over-month and 43.7% year-over-yeardecline in active home listings during this period. This drop means that the 4,821 homes at the start of November accounted fell short of about 2000 active listings.
The report further highlights home sales continued to spike even as the inventory dwindled. The year-over-year rate for closed sales quickly rose to more than 16%, with 5,984 closed home sales recorded in October.
The remaining 6,141 pending sales at the end of October seem to have poised November for another record-breaking trend. Meaning that the rising pressure to find a property in this market will lead to higher home prices for the rest of 2020.
The previous national elections made buyers more skittish and unable to ask for concession forcing them to accept home offers just as they were. The median closing price in October for a typical single-family apartment was $519,900, which was slightly more than a 14% rise in the year-over-year mark as well as 1.94% up in the month-over-month median closing price.
This sudden rush for available homes shrunk the median waiting time to about six days, unlike the 17 days in October 2019. Besides the current severe bidding wars, buyers can now use options like escalation clauses, as-is offers, and appraisal gap waivers to build concessions to secure a decent purchase.
The current average closing price in the Denver metro housing market is $625,100, an 18% rise compared to last year’s worth and a 4.5% month-over-month gain.
The DMAR’s Market Trend Report further highlights that single-family activity quietened Condo/townhouses activity in the Denver residential market throughout October. This dominance is primarily due to the increased buyers’ preference for single-family homes in the region.
The median selling price for a typical condominium unit or townhouse ranged around $339,425 in October. Despite being subdued, this was a 1.32% gain from the previous month’s price and a 9.85% rise compared with the year earlier.
The average closing price for these house types hiked to about $393,733, marking a 2.3%increase compared to September and a 7.86% year-over-year gain.
A change of heart
The total number of homes sold in October throughout Denver maintained a year-over-year rate of 16.3% but slightly decreased from September by 7.1%. Specific markets such as that for the detached luxury home (those priced above $1million) recorded425 closings marking an increase of 16.76 from the previous month and 115.74% from October 2019.
Real estate analysts attributed this massive increase to a shift in buyers’ preference where luxury home buyers want to have huge spaces and more rooms that can be used to set up home offices and remote working and learning areas for their kids. This trend is outlined as a sellers’ market in the report, and buyers can take advantage of the 14.62% rise in new listings.
The attached luxury market, on the contrary, appears to be relatively slow with close to 23 weeks of inventory compared to that ofabout eight weeks for the detached side. Pending closing sales for the former segment recorded a 28.95% decrease in its month-over-month statistics and a 28.57% gain in the year-over-year comparison.
The report further breaks down the year-over-year data and reveals that the attached luxury market recorded a gradual increase in inventory with 233 homes in 2016 and 427 this year. Pending sales for this market segment also rose to 247 deals in October from 233 sales in 2016.
This trend clearly shows a close to 97% drop in close-price-to-list-price ratio compared to 2016 data, meaning that competition for this market segment isn’t quite fierce, favoring buyers’ market.
Unlike other thriving housing markets such as that of New York, the Denver residential market closed with a 2% drop in new listings at the end of October. We hope that sellers will eventually match buyers’ enthusiasm going into 2021.
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