This month we’re going to walk through three metrics – single family + condo homes, single family homes, and condos to give you a better understanding of what the numbers mean and how you should use them if you’re looking to buy or sell real estate.
The Market Snapshot information from the Denver Metro Association of Realtors shows two different time periods, Prior Month and Year-Over-Year. Prior Month compares the most recent month to the month before (e.g. Oct. ’19 vs. Sept. ’19). Year-Over-Year compares the prior month to the same month one year ago (e.g. Oct. ’19 vs. Oct. ’18).
An important point to note is that there are definite seasonal differences in real estate so using month-to-month comparison trends can be somewhat misleading. For example, we expect fewer properties to come on the market during the Fall and Winter and more listings during the Spring and Summer. So a word of caution – don’t get too caught up in month-to-month data. Review it, but the year-over-year data is more relevant, useful and instructive. We’ll focus on the year-over-year numbers below.
Residential (single family + condo)
Active Inventory: Up .21 percent. This is the number of active properties on the MLS. It’s almost exactly the same as last year. The number of Actives went up a tiny amount over the year to 8,557. The meaning is clear: we have almost no change in the market in the past year. Since demand (people wanting to buy houses) is outstripping supply (people selling houses) our only conclusion can be that the strong seller’s market will remain until that changes. So far, we have gone through years of continually decreasing inventory.
Sold Homes: Up 1.62 percent. This is the number of homes that were actually sold in Metro Denver in the past year (4,654). This metric is closely related to Actives (above). Similar to Actives, there were close to the same number of properties put on the market last year, and despite everyone’s predictions, about the same number sold.
Why are so few homeowners putting their homes up for sale, despite the record high prices? Economics 101 suggests that as the prices rise, sellers would chase the dollars and sell their homes to capture the record high prices. Yet just the opposite has happened the past several years. As prices have risen, inventory has done the exact opposite and continued to drop or stayed very low.
Our best guess is that while potential sellers understand they can make a big profit on the sale of their home, they are worried they won’t be able to find their replacement house because of the tight inventory. This is not misplaced anxiety; it is reasonable and logical. The result has been a multi-year cycle of fewer sellers willing to take a risk looking for a replacement home, leading to fewer sellers putting their home on the market, leading to less inventory of homes for sale, leading to increased anxiety of looking for a replacement home, and on and on. When this cycle will end is anyone’s guess, but we’re not expecting it to end anytime soon.
Sold Price – Average: Up 3.54 percent to $486,390. This is the average sold price of all the single-family properties sold in the past 12 months in Metro Denver. One might say the average home sold for 3.54 percent more this year than it did last year. Essentially, it’s the amount of appreciation in the market. 3.54 percent is a healthy number.
Sold Price – Median Up 5.8 percent to $423,200. Median and average are closely related. Median means the center number. So a lot of low-end properties pull the median sold price down below average. Notice it climbed more than the average as the number of low-end properties decreases.
Days on Market Up 10 percent with an average of 33 days on market. 90 days is considered average so houses are still flying off the shelves. Sellers are still selling almost 3 times faster than usual so we are still in a very strong market.
Single Family (detached single-family homes, no condos)
Single-family prices are close to last year with average prices up another 1.96 percent. The Active Inventory is down from last year and Days on Market are still very low.
Active Inventory 5,844, down 5.56 percent.
Sold Homes 3,348, up 3.65 percent.
Sold Price – Average $533,483, up 1.96 percent.
Sold price – Median $456,000, up 4.83 percent.
Days on Market – Average 32, up 3.23 percent.
Average Condo sold prices are up faster than single-family homes, up 6.95 percent. More condo product is coming on the market but it still selling very fast. The inventory of condos on the market is up (15.4 percent) but each condo is still averaging just 34 days on market, meaning condos are selling fast.
Active Inventory 2,173, up 15.4 percent
Sold Homes 1,306, down 3.26 percent
Sold Price – Average $365,665, up 6.95 percent
Sold price – Median $306,875, up 2.35 percent
Days on Market – Average 34, up 36 percent
If you’re looking to buy or sell a home, it’s so important to understand what the market is telling you.
As we see it, it’s a further continuation of a low inventory environment with lots of unsatisfied demand. Too few of homes are being listed, unable to keep pace with too many buyers. As we’ve said for years, we don’t see this changing for the foreseeable future.
If you’d like to learn more about how you can best position yourself in this real estate market feel free to give me a call. I’d love to help you understand what your best options are to help you make a great decision!