Colorado Real Estate News

After a Major Halt, Metro Denver Rebounds with a Home-buying Frenzy

By Jason Exley, PHR, GMS, GDS, Director of Relocation at Kentwood Real Estate

How quickly the world changed. Denver has received national attention for its red-hot real estate market for nearly a decade. At the start of March, the metro Denver real estate spring market was showing signs of being one of the best on record – but that changed by the end of the month when the market, like the rest of the nation and world, felt the effects stemming from Covid-19.

Resilient as ever, the market picked right back up and a home-buying frenzy ensued in metro Denver this past June.

A record number of Denver-area homes on the market went under contract in June, home prices are on the rise, mortgage rates are a record low and the market is experiencing near record-low housing inventory. These factors and more are making for a strong seller’s market. Other factors for Denver’s rebound is that many homebuyers from other major markets across the nation are relocating here, whether for the lifestyle, cost of living or the job market. Companies based in Denver continue to move talent in and out, and new company headquarters are showing up all the time.

According to numbers from the Denver Metro Association of REALTORS® (DMAR), in June, a record number of homes, 7,676, shifted into a pending sale status, up 16 percent month over month and 27 percent year over year. Additionally, weekly home closings were back above 2019 levels, ending 11-weeks of a COVID-19 induced housing slump. It seems consumers turned from stocking up on personal necessities to buying houses with the same level of frenzy. And prices are back on the rise as a result of this demand.

In March, pre-Covid-19, the average price for a residential property in metro Denver zoomed above $500,000 for the first time, to $513,535. That price then dipped back down below the half-million-dollar mark during the home-showing shutdown and uncertain economic times in April and May. In June, however, average prices bounced back up to $509,736, the second-highest average price for residential real estate in Denver.

During that month, 7,364 homes were put up for sale, but demand was even higher. More homes were put under contract than came on the market for sale in the Denver area. And since there was not a lot of housing inventory at the end of May, the market was left with even less inventory at the end of June, down 11% month over month and 33% year over year. In fact, June had 6,383 listings at month’s end, which was nearing the record-low number for that month at 6,197 in June 2015. Less inventory means home sellers had more power. The only segment of the market in which homebuyers had the edge were condos priced over $1 million.

With masks, gloves and limited home showing time slots, real estate agents managed to write a record number of accepted contracts and closed 57% more homes in June compared to the month prior without doing traditional open houses.

At the end of June, the eighth amendment to Colorado’s public health order loosened the rules for open houses – but it isn’t going to be easy. Under the new rules, gloves, masks, a social distancing calculator, log sheet and an Occupational Safety and Health Administration approved ventilation system are just some of the items required to host an open house. Once real estate agents review all of the new rules, they may decide to continue virtual showings.

Following the stay-at-home executive order by Colorado Governor Jared Polis on March 26, ‘real estate’ was classified as a critical business and thus real estate continued to conduct business for homebuyers and sellers in need. However, how real estate was transacted looked very different and it still does today. For some time, Colorado no longer allowed open houses in the traditional sense, driving with clients or even riding in the same elevator. Transactions were being completed at no-contact, curbside closings with closers wearing gloves and masks. There was a new contract, called the COVID-19 Addendum, that allows a transaction to be extended in the case a homebuyer or seller is exposed or quarantined, as well as new CDC regulations to follow when listing and showing homes.

Virtual tours, videos and FaceTime walk-throughs have become the preferred form of marketing so homebuyers don’t have to enter properties unless they truly think it might be the one they want to buy.

Realtors adapted and some now prefer virtual open houses, and they have been effective. In fact, a real estate agent that that has been in the business for four decades just closed on a double-ended deal solely stemming from a streaming Facebook Live open house he conducted. The new virtual and digital tools to conduct real estate are here to stay, even when the pandemic is in our rear-view mirror.

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High Buyer Demand in Metro Denver

A record number of Denver-area homes on the market went under contract in June, home prices are on the rise, mortgage rates are a record low and the market is experiencing near record-low housing inventory. These factors are making for a strong seller’s market.

In June, a record number of homes, 7,676, shifted into a pending sale status, up 16% month over month and 27% year over year. Additionally, weekly home closings were back above 2019 levels, ending 11-weeks of a COVID-19 induced housing slump.

Home Prices Rising

In March, pre-COVID-19, the average price for a residential property in metro Denver zoomed above $500,000 for the first time, to $513,535. That price then dipped back down below the half-million-dollar mark during the home-showing shutdown and uncertain economic times in April and May. In June, however, average prices bounced back up to $509,736, the second-highest average price for residential real estate in Denver.

Luxury Market is Coming Back

In June, 7,364 homes were put up for sale in all housing price points, but demand was even higher. More homes were put under contract than came on the market for sale. Less inventory meant home sellers had more power. The only segment of the market in which homebuyers had the edge were condos priced over $1 million. Overall, after the halt earlier this year as a result of showing restrictions and consumer uncertainty stemming from COVID-19, the Luxury Market is picking back up.

The number of homes sold in the single-family luxury segment was up 100% in June to 230 from 115 in May, and up to 15 from eight for luxury condos, an 87.5% increase month over month. At the end of June, there were 413 pending sales, up 38% from last month and an impressive 59% from last year. 

Year to date, Luxury Market listings were up 1.76% over last year. There has been double-digit growth since 2016, so under 2% growth is a significant figure that depicts the true damage stemming from COVID-19.

*Written July 7, 2020. Updates may be available after this date.

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New listings flood the metro-Denver housing market in May

As stay-at-home restrictions stemming from COVID-19 loosened and businesses began phased openings in May, metro Denver had a surge of new listings hit the housing market, up 56% month over month to reach 7,312. Some of the surge can be attributed to sellers putting their homes back on the market after withdrawing them when showings were halted back in March.

Home sales down as expected in May, but homes under contracts skyrockets

The number of sold homes was down 20% month over month and 49% year over year in May, following the weeks of strict home-showing restrictions. The average sold price of a home dropped slightly, back below $500,000 to $495,925. That was 1.24% lower than April but 2.43% higher year to date.

Notably, homes under contract increased a substantial 115% from the previous month.

Home sellers had the upper hand, except in the Luxury Market

There were 7,170 active listings at the end of May, 4.6% more than April but 19% less than the previous year. Home sellers had the upper hand with low inventory in all price ranges except for homes priced over $1 million, where there was 9.5 months of single-family inventory and 25 months for condos. Anything over six months is considered a buyer’s market.

Only 115 homes sold and closed for $1 million or greater last month, down 29% from April and 59% year over year. The closed dollar volume in the luxury segment in May was $174.4 million, down 24.4% from April and nearly 60% year over year.

While the last few months were slower stemming from the pandemic, year-to-date data reflects how hot the metro-Denver real estate market was at the beginning of the year. For example, new listings year to date for single-family luxury homes is only down 1.47% and luxury condos are up 10.45% compared to this time last year.

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How the Coronavirus is Impacting the Denver Housing Market

Kentwood Real Estate is monitoring the ever-changing real estate landscape stemming from the coronavirus COVID-19 situation. We are staying informed and following the guidance of the CDC, Colorado Department of Public Health and the National Association of REALTORS® to ensure we are providing our clients with the ultimate in ethical, professional representation – we will take all measures to ensure a safe, productive experience.

 
What we are seeing in the metro-Denver residential real estate market today is that overall buyer demand in the local market is keeping activity strong. Historically low interest rates are motivating buyers, and we continue to see multiple offers. While many sellers are continuing to list their homes, some are choosing to pause temporarily. In the case more sellers wait, there will be an increased strain on housing inventory.


Housing Inventory Challenges

In February, while the stock market struggled with coronavirus fears, real estate stayed strong. Month over month, 5.6% more homes came on the market, 7% more homes shifted into a pending status, and 3% more homes closed.

 
The month ended with only 4,835 active listings, down 2% from January and nearly 20% year over year. For perspective, 5,083 listings went under contract in February; so, figuratively speaking, only 39 new listings came on the market that didn’t go into contract.


The ‘New’ Home Showing

To accommodate buyers in today’s new normal, listings are sanitized ahead of showings, and hand sanitizer and booties are readily available. Furthermore, virtual home tours are quickly growing in popularity. Facetime to more advanced 3-D technology are being utilized and becoming a preferred method of house hunting by many.

 
Real estate remains a good investment. We believe the security of real estate as a safe haven from both a psychological standpoint and an investment standpoint will resonate in future weeks and months. Real estate has always weathered economic turmoil in the long run, and will do so now.

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The New Year Kicks Off Briskly for Denver-area Real Estate

In January, a massive influx of new homes came on the market in metro Denver but were quickly scooped up by homebuyers.

 

While 4,853 new listings hit the market, up 89% from December, January ended with 4,941 active listings because homebuyers placed 43% more homes in pending status month over month which diminished the housing inventory surplus.

 

Contributing factors to the market heating up quickly included continued low interest rates and 18 days above the average temperatures in January.


On the Heels of a Slow December

In the entire residential market, there was about a 35% drop in the number of closed homes and sales volume month over month in January which was a reflection of the slower market activity at the end of 2019. As usually occurs this time of year, the days on the market were longer, averaging out to 45 compared to 41 in December.


Steady Home Prices

The average single-family home price was down from its summer highs, but higher year over year by 6.86% to $532,494. The picture is a little different for condos that experienced a 5% month-over-month drop in average price to $355,754, which is also down 0.37% from the same month last year; representing the first price drop in the month of January in at least the past four years.


Homebuyer Advantage in the Luxury Segment

In the Luxury Market, homes priced $1 million+, months of housing inventory increased to 6.92 for single-family homes and 8.5 for condos, up 41% and 68% month over month respectively. So, luxury homebuyers are not having to compete as much as other price segments.
Year over year in January, 11.7% more single-family homes and 20% more condos closed in the Luxury Market. The number of homes that closed in the entire residential Luxury Market was up 12.6% and total sales volume was up 4.7% from one year ago. However, sales volume and the number of homes closed in the entire luxury residential market were both down 46% month over month.

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2020 Denver Real Estate Market Kicks Off as a Home Seller’s Market

Housing conditions in metro Denver last year, from low inventory to record-breaking prices, position Denver as a seller’s market going into 2020.

 

Scarce Inventory

2019 ended with 5,037 active listings, down 9.7% from 2018; notably representing 41% of Denver area’s 30-year annual average of 12,262 active listings. For perspective, active listings reached their highest point in July 2006 with 31,989 listings. During that period of record highs, months of inventory stood at 6.6 months which implied a healthy homebuyer’s market. The record-low month was in December 2017 with 3,854 listings.

Considering the average rate of home sales, it would take only 1.13 months to sell all single-family homes and 1.37 months to sell all condos in the Denver area. Anything under four months means sellers have the power in negotiations, while more than five months means buyers have control.

 

Record-breaking Home Prices

2019 established a new historical high and marked the eighth consecutive year of price gains. In 2019 the average home price was $486,695 and the median home price was $420,000, up 2.85% and 2.5% respectively compared to 2018. Furthermore, over the last 30 years the average home price in metro Denver has increased a staggering 417%!

 

Luxury Market Overview

The Luxury Market, homes priced $1 million and up, had 4.06 months of inventory at the end of December for single-family homes and 2.26 for condos – that’s more than any other housing price segment; yet it still indicates the market overall favors sellers.

The Luxury Market was the only housing segment to see a year-over-year decrease in average and median days on market – from 68 in 2018 to 60 in 2019, down nearly 12%, and has notably been decreasing since 2015 when it stood at 87 days.

In 2019, 2,421 homes sold and closed for $1 million or greater, up nearly 12% from 2018. The closed dollar volume in the luxury segment was $3.74 billion, up 13.5% compared to 2018.

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Fewer Choices for Homebuyers in the Denver Area this Holiday Season

In November, the number of new listings added to the Denver-area housing market dropped 32% month over month and 6.5% year over year. As a result, active inventory dropped from 8,557 in October to 6,988 in November, down 18%. While we should expect a seasonal slowdown, this is a big drop even for this time of year when you compare numbers from Q4 2018 which experienced a surge of new listings.

 

Fewer Homes on the Market Means it’s Tougher for Homebuyers

With less homes to choose from, homebuyers are taking more time to find their dream home and then, once they do, they are having to compete! In November, closed sales were down nearly 23% month over month, but notably sales were still up over 2% year to date compared to 2018. The number of homes that went under contract dropped 10.8% month over month which indicates the number of homes sold will likely be down next month, too.

 

Home Prices Steady in the Luxury Market

For the housing segment of homes priced $1 million and up, while inventory has decreased from the previous month, the close-price-to-list-price ratio has remained steady from both the previous month and previous year.

 

Out of the 166 luxury properties that sold in November, about 90% of them were single-family homes, which could explain why the months of inventory for single-family properties is at the high end of a balanced market with 5.45 months of inventory. Likewise, months of inventory for condos shows a buyer’s market at seven months. For greater perspective, it is important to note that year-to-date luxury condo sales were up 50% from the previous year.

 

The average months of inventory across all price points is 2.13, showing that the Luxury Market is on its own island. The condo market has higher months of inventory compared to single-family properties throughout all price points. This shows that, overall, there is more demand than supply in single-family homes relative to condos in the entire residential market.

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Seasonal Cooldown is Expected

Home sales usually peak mid-summer and then the market begins its seasonal cooldown just in time for the fall. The lowest number of both new listings and number of homes sold usually occurs in December or January. It appears we are right on track with that trend this year.

 

The number of new listings added to the Denver-area market in October was down 10% month over month, but still up 4.37% year to date. The 5,425 homes added was the lowest number of new listings in a given month since February! This may have contributed to the decline in homes sold in October, down 6.4% compared to September, yet that’s still nearly 2% more year to date.

 

Homes are also sitting on the market longer. The average days on market year to date was at 30, up 25% compared to last year which was at 24 days.

 

The Luxury Market is Well-ahead of Last Year’s Pace

Market statistics signal it remains a good time for buying and selling of luxury homes. In fact, year to date, 2019 is well-ahead of last year’s pace in the luxury segment (homes priced $1 million+).

 

There was a total of 2,051 luxury homes that sold year to date in October compared to 1,896 this same time last year, an increase of 8%. Luxury condo sales continued to perform well with 237 condos sold year to date, an increase of 56% over last year. Year to date, single-family home sales have increased from 1,744 in 2018 to 1,814 in 2019, up 4%.

 

Unlike the entire residential market, the Luxury Market’s days on market improved. Month over month, median days on market in the luxury segment went from 38 in September to 28 in October.

 

Furthermore, months of inventory for luxury single-family homes is 6.13, which is the equal balance between buyers and sellers. Sellers continue to maintain an edge with condos with 4.35 months of inventory. While price reductions have become common, the year-to-date close-to-list price ratio has remained steady for luxury homes at 97.42% in 2019 compared to 97.35% in 2018.

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Metro Denver is Still a Seller’s Market

Metro Denver is Still a Seller’s Market Home-Seller-Market

Fact: Housing inventory under five months is considered a home seller’s market. In Metro Denver, the month of September ended with 2.04 months of single-family home inventory and 2.12 months of condos for sale, which clearly indicates we are still in a seller’s market.

 

While inventory has been steadily increasing over the past several months, September still only ended with 9,286 active listings. For comparison, the record-high housing inventory for the month of September was in 2006 with 31,450 active listings, and 2015 represented the record low with 7,516.

 

The Luxury Market is the Exception

The price segments for which homebuyers have gained more negotiating power are condos priced between $750,000 and $999,999 and the single-family homes priced over $1 million.

 

If buyers are wanting to buy a single-family luxury home, now may be the time. With over six months of inventory for homes priced $1 million plus, we’ve moved from a balanced market slightly into a buyer’s market in the luxury segment.

 

Housing Price Appreciation Has Slowed, but Has Not Reversed

Overall in the Denver-area residential market, while prices have decreased month over month, the average sold price of a home in September was still up 6.06% year over year and 2.52% year to date, $483,734 and $487,814 respectively. Year to date, the close-price to list-price ratio was at 99.31% in September, whereas it has been slightly over 100% since 2015.

 

Month over month, single-family homes in the Luxury Market had price depreciations with homes selling 96.49% from list-price to close-price, down 0.88% month over month and 0.42% from one year ago. Slowing down too was the single-family sales volume that fell 16.47%month over month but was still up year over year with an increase of 45.09%.

 

In general, you could say we’ve been turning from an extremely fast-paced market to a slower moving, healthier one this year.

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Explaining economic uncertainty

Uncertainty categorizes the nation’s overall economic climate. But what does it mean for Realtors® and their clients in Denver-area’s housing market? Global growth and business confidence are down while consumer spending remains up. Low interest rates and rising family income are improving affordability and offsetting the effects of the continued lack of – albeit steadily rising – housing inventory.

Generally speaking, real estate conditions are good for both homebuyers and sellers alike as we enter into a more balanced market.

 

Conditions favoring buyers

In August, homes under contract were up compared to July and year over year. So, why were the number of homes sold month-over-month and year-over-year down? Homebuyers are becoming more discerning and sense the approaching market shift to be in their favor. While we are technically still in a seller’s market with 1.81 months of inventory, the increase in inventory is giving buyers more choices and more time to choose – as evident in that the median days on market jumped up 27.27% from July to August and up a significant 57.14% year to date compared to last year.

Additionally, buyers have been able to do some negotiating as the close-to-list-price ratio dropped to 99.36% year to date, compared to above 100% at this point in the past few years. The lower interest rates also improved their buying power allowing some to move up in price.

 

Home sellers still selling at peak prices

While home sellers may not be selling their homes as quickly, they are still getting more money than they would have last year. Average and median sold prices dropped a bit month over month but were up 2.22% and 1.45% respectively year to date compared to 2018.

The Luxury Market (homes priced $1 million+) remains strong. The number of luxury homes sold continues to grow, average price has held strong since 2015 at around $1.5 million, and average days on market is down four days to 59 from 62 at this time last year.