Auction.com has released a study showing that Denver is currently the hottest housing market in the country. But I would argue that at this time, Denver’s real estate market is more unbalanced than it is “hot.” My definition of a hot market is that demand AND supply are both high – or at least far more balanced than it is right now. But right now I’m seeing a ton of demand and very low supply. (“Ton” being a scientific term of course…)
The auction.com study looked at employment growth, population growth, existing home sales and median home prices. What it didn’t mention is housing supply – new listings are HALF the number they were at this time 5 years ago.
I’ve been working with a seller in Thornton for 3 years. In April 2012 she was underwater on her mortgage. In the last 2 years, her home has doubled in value. Now she’s getting ready to actually list her house, and use her increasing equity as a down payment on a new home. (Of course then she faces the lack of supply on the buyer’s side.) There was a time when we blamed the real estate crisis on these kinds of price increases.
At least the Denver Post pointed out recently that we have a “modern-era low” of housing supply right now. The article also points out that this has led to an affordability problem, and will continue to be a problem, until the market starts to even out.
Personally, I can say that I’ve only come across 2 listings lately that had been on the market for a while (let’s just say longer than a month) and didn’t have multiple offers on the table. (Interestingly, both of those deals ended up falling through with my buyers.) Everything else has been a multiple offer situation for my buyers, on homes that have been on the market for mere days or even hours.
What’s interesting to me is that in 2008 we were all crying about how rising prices and multiple offer situations created a housing bubble, which created the real estate crisis. In 2015, we’re gleefully clapping our hands over what? Rising prices and multiple offers. Hmmm.
Because I like to research the data on the Metrolist database I find all sorts of good stuff:
Note that in March 2010 there were 12,770 new listings in the Denver area. In March of this year there were 6,312. The answer that many people give me – that legalized pot is causing home buyers to flood the state and buy up all the houses – just isn’t accurate. Inventory is low to start with. (If pot buyers were flooding the state they’d face the same inventory problem everyone else here does!)
In March 2010 there were 3,823 houses sold in the Denver area. In March 2015 there were 4,556 homes sold. An 18% increase, but still not enough to keep up with the demand. Check out the current Denver area housing inventory – current inventory is a little over a month – which means that if no additional homes were listed, all the current homes would be sold in about a month. A balanced market is roughly SIX months of inventory. According to those figures, the Denver area hasn’t seen a balanced market in about 3 years.
What does all this mean for you, the home buyers and sellers? Your house will sell faster than you expected, and likely for more than you expected. As a buyer, be prepared to face multiple offer situations on every house, be prepared to make decisions and your own offer quickly. To make your offer more attractive, consider paying your own closing costs, rather than asking the sellers for concessions. Also, don’t assume that a bidding war means that a home will sell for $10’s of thousands over asking price – a couple thousand may do it, depending on the asking price.
Based on information from Metrolist®, Inc. for the period of January 1, 2010 to March 31, 2015. Note: This representation is based in whole or in part on content supplied by Metrolist®, Inc. Metrolist®, Inc. does not guarantee nor is it in any way responsible for its accuracy. Content maintained by Metrolist®, Inc. may not reflect all real estate activity in the market. I obviously didn’t sell or list all the homes posted here and this post was done to show trends in the area only.