Special Thanks To DMAR Market Trends Committee For The Following Report…
Happy New Year! It’s time to look back and ponder what happened over the past year and look ahead to set goals and make predictions for the new year. Let’s start by looking at the top three things we know about the Denver metro real estate market in 2019:
- Inventory continued to be scarce. The Denver metro area saw a significant increase in homes for sale in 2018, up 44.71 percent from 2017. That prompted talk of recession and fears of another housing crash. But at the end of 2019, that pile of inventory shrunk. We ended the year with 9.68 percent fewer homes to choose from year over year. The main reason we saw fewer choices was not because more were going under contract or selling, but because 29.94 percent fewer new listings came on the market in December compared to the month prior.
- Considering the average rate of sales, it would take only 1.13 months to sell all detached homes and 1.37 months to sell all attached homes in the Denver area. For perspective, in January 2010 we had 9.8 months of attached home inventory and 9.8 months of detached home inventory. Anything under four months means sellers have the power in negotiations, while more than five months means buyers have control. We have started 2020 with sellers firmly in control.
- There was an increase in the average number of days it took to sell a home in 2019. For three years it took an average of 26 days to sell. This past year it jumped up 19.23 percent to 31 days. That spooked a lot of sellers who had been hearing about their neighbors’ homes getting multiple offers in the first few days on the market. When that didn’t happen, sellers started dropping their prices.
- Despite more price reductions, home values continued to go up. Not at eight to nine percent like we saw earlier in the 2010s, but up nonetheless. The average close price in 2019 was $486,695 – that’s 2.85 percent higher than in 2018. If you take a longer look back to get more perspective, you’ll see what a fabulous investment real estate is in the Denver metro area. The average residential close price increased 87.82 percent from 2010 when it was only $259,084.
The great thing about sales data is that it looks at what we know happened and then we can compare it to years past to get perspective. We hope by doing that we can come up with a prediction of what will happen in the future. But when we look at the future, even if the data helps us make an educated guess, it is still a guess.
Affordability will continue to be an issue in the Denver metro area as the cost of land and new construction increased with our home prices and most salaries didn’t keep pace. Buyers will continue to want more and more as they pay more and more. Sellers are going to have to do more to get their homes in tip-top shape to get top dollar. And we are starting the new year with low inventory, low interest rates, a strong job market and a steady economy, we predict we will see continued long-term gains in real estate. Bring it on 2020!
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