The Denver housing market boom seems to be unstoppable even as we come to the end of 2020. Home sales continue to rise across the state as more people invest in the local real estate.
According to the latest LIV Sotheby’s International Realty (LIV SIR) housing market report, Denver recorded a 22% rise in listings sold, accounting for 5,199 home sales. The average selling price ranged around $534,566, equating to an 11% price increase throughout Denver.
Besides the listings selling at a higher price, the LIV SIR report further indicates that Denver’s homes took fewer days on the market before selling. This averaged to a significant drop of 31%.
Trend in the luxury market segment
Generally defined as listings priced above $1 million, the luxury market took center stage throughout November 2020. This particular market recorded a 30% year-over-year increase in the number of listings sold, and the new average price for homes in this segment spiked to $1,540,408last month.
Significant sales in this segment include the Tudor-inspired 515 Race Street home that sold for $5,975,000 and the magnificent 3120 Bears Den Drive property that went for $5,925,000.
Market activities and inventory overview
Inventories throughout the state are at a historic low, significantly affecting both pending sales and closed deals in the Denver real estate market in November.
The Denver Metro Association of Realtors’ housing market report recorded only 3,415 active listings for attached and detached single-family housing units. A new record low compared to the 3,854 previous low experienced in December 2017.
The report cautions that the state is left with less than 0.8 months of inventory capable of being wiped out by the current high demand in two weeks. That is if nothing changes.Seasonal trends show that it is normal for property stock to drop over the festive holidays, but the current 0.71 months of inventory set a historic low.
With 4,820 close home sales in November for the combined single-family residences, the Denver housing market recorded a 12% comparable year-over-year sales and a 25.49% month-over-month decline of the same.
Pending sales also dropped by about 18% to 4,796 in November from 5,869 in October.
Properties priced from $500,000 to $750,000 usually dominate the housing market share but being a different year, high-end homes now account for most of Denver’s active inventory. At the start of December, this local residential market had 561 luxury property listings representing close to a third of the overall available homes.
New listings throughout last month for the luxury market segment increased by 17.09% compared to the previous year.
What this means for buyers going forward
Realtor.com predicts that both inventory shortages and high house demand will skew the Denver real estate towards a sellers’ market. An increase in mortgage rates is expected to result in less affordable homesgoing into 2021.
The report further projects a 12.5% rise in home sales through the first quarter of the coming year.
Mortgage rates are predicted to rise slightly from below 3% to a modest 3.4% by June 2021, making it very hard for buyers to offset the expected 5.4% up in home prices. This means that the competition for good luxury properties will become fiercer, and buyers should prepare to lose some bids before getting their desired home.
The Denver market is expected to adjust itself to absorb new home supply throughout next year with forbearance contracts’ expiration. The subsequent rise in inventory, coupled with a slight increase in the millennial population, is predicted to help relieve the Denver housing market from its current demand pressure.
Many are hopeful that we continue with the current market momentum into the New Year, but one thing that buyers can find solace in is that the increase in closing prices leveled off in November. The median closing price in Denver at the start of December for a detached single-family property was $513,000. This marks a 0.39% month-over-month drop and a 14% year-over-year increase.The attached apartments’ median closing price averaged at $335,000, recording a 0.59% drop from October and a 7.4% year-over-year increase.
Despite the stiffer restrictions due to COVID-19 resurgence and the approval of a working vaccine, real estate analysts are still skeptical about future housing market trends in large metros such as Denver. Depending on how this plays out, it still has a greater chance of leading the market towards extremes like total collapse or a stronger comeback in 2021.
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