Unlike the resurging home purchases, rising property prices, and increasing bidding wars, inventories for the residential real estate throughout Denver were still low last month. According to the Denver Metro Association of Realtors (DMAR) latest report, there were at least 2,024 active homes at the start of this month. This general lack of active listings throughout the 11-county metro accounted for about a 58.14% decline in year-over-year turnover.
With an increasingly charged-up demand, properties are now selling at an incredible speed that’s forcing buyers to apply elusive strategies to get their dream home under contract. Home buyers in Denver are scooping up properties faster than the supply of new listings, making prices escalate at an exponential rate.
The report further illustrates that listings are now getting more than 20 offers from 100+ showings per weekend.
Besides the increased demand, February recorded a 3.7% year-over-year increase in overall property sales, accounting for at least 3,641 overall property sales.
There were only 4,706 pending sales by the start of March.
Standard housing records by end of February
Single-family homes are the most prevalent type of properties in Denver. The median closing price for the usual single-family detached homes averaged at $530,000 by the end of last month, equating to a nearly 22% increase in its yearly turnover.
That for attached homes was $337,250, accounting for slightly more than a 12% yearly increase. With a more than 16% increase in the number of closings, the average closing price for condominiums rose to a record-breaking $401,552.
According to DMAR records, this was the first time that closing price ever rose beyond $400,000 for this market segment.
Unlike the usual single-family market, high-end properties (those priced beyond $1 million) recorded a surge of 46.1% in the yearly turnover for detached luxury units. The number of closed home sales for this segment was 206 luxury condos, and the attached types closed at 25 by the end of last month.
Days of stay
Despite the slowing effects of the pandemic, the Denver housing market has no signs of slowing down. Many 2021 forecasts predicted that market activities would intensify through the first two quarters when mortgage interest rates are still low.
The constant increase in demand is currently making it very hard to keep up with the rate of new listings from sellers and is luring buyers into using elusive methods to win a bid.
Despite the immense increase in home prices, homes are now spending an average of five days before they go under contract. That’s nearly 20 days faster than at the start of the first quarter in 2020.
According to a Red Fin survey, the Denver housing market has the second-fastest days of stay after Tacoma, Washington.
What this means for first time home buyers
According to findings from a recent survey done by Nerd Wallet, Denver still ranks among the least affordable residential housing markets outside the coastal regions. Between this report’s findings and the fact that active listings dropped by 32% in the second half of 2020, most first-time home buyers can already tell that getting into this residential housing market is much tough to get in.
In the survey, Nerd Wallet experts assessed the affordability ratio for first-time home buyers across the 50 largest metro areas in the U.S. during 2020’s final quarter. In simpler terms, they computed first-time home buyers’ affordability to buy a home three times their median income using average list prices.
Denver’s multiple ran 5.7 times the median income range for buyers aged between 25 and 44 years, a standard proxy for first-time buyers. The national ratio for median income and average list price runs at a 5.2 times multiple.
The affordability ratio in Salt Lake City was 6.1.
First-time buyers who are already working within Denver seem to be more favored as they get more income. The median household income for individuals aged between 25 and 44 years in Denver is $91,209, while Salt Lake City’s range is $86,332.
Increased home prices, tough bidding competitions, and inventory shortages are generally plaguing home buying processes in Denver, making it very hard for first-timers to get in.
With only 0.7 months of available home stock for single-family units in Colorado since January, analysts are now more optimistic about new supplies going into the second quarter. Issues relating to low supplies and affordability will continue to be the biggest threats to this balanced market.