record-low inventory doesn't tell full story of denver's fast-paced real estate market
/
By James Rodriguez | Published on March 3, 2021
February marked yet another month of record-low inventory for the residential market in the Denver metro, where a resurgence in homebuying activity that began last summer has continued to push prices higher and fueled stiff competition among potential buyers.
But the low volume of active listings in the 11-county metro — there were 2,024 available homes at the end of February, a 58.14% year-over-year decrease — doesn't tell the full story of the local market, according to the latest monthly report from the Denver Metro Association of Realtors.
Andrew Abrams, chair of DMAR's market trends committee and a Denver Realtor, said the underlying theme of the market today is "speed." In comments accompanying DMAR's report, Abrams noted the rapid pace at which buyers are scooping up homes relative to the number of sellers listing. Homes are quickly going under contract and prices are accelerating as homebuyers seek to make the often-elusive winning bid.
"The feeling of frustration and exasperation is present throughout the real estate community," Abrams wrote.
DMAR's report also notes that some listings are seeing more than 100 showings in a weekend and receiving upward of 20 offers. Abrams himself recounted writing two separate offers on behalf of clients that were $101,000 and $90,000 above asking price. Neither of those offers ultimately won out.
Despite the difficulties facing many buyers, homes still traded hands in February — 3,641 to be exact (including both detached properties, such as single-family homes, and attached properties, such as condos), up 3.7% from February 2020. Another 4,706 sales were pending at the end of the month.
The median closing price for a single-family home was $530,000, up 21.84% year over year. For an attached home, the median price was $337,250, a 12.79% increase from a year ago.
Single-family homes have been in higher demand than condos over the past year, but attached properties appeared to be gaining ground in February. While the number of closings for detached properties was down 1.8% year over year, the attached market saw closings increase 16.29% from a year ago. The average closing price for an attached home also surpassed $400,000 for the first time in history, according to DMAR, reaching $401,552.
The luxury market, which includes homes sold for $1 million or more, saw sales surge as well. Buyers closed on 206 luxury detached homes in February, a 46.1% jump from the same month last year. The number of luxury attached closings was slightly lower than in January (25 in February, compared to 29 the month before), but was still up 66.67% year over year.
The challenges of low inventory aren't unique to Denver. The state of Colorado had just 0.7 months of supply of single-family homes in January, according to the Colorado Association of Realtors. Industry experts typically consider anywhere from four to six months to be a balanced market.
And while Re/Max CEO Adam Contos said in a fourth-quarter earnings call in late February that he is optimistic about the future of the U.S. housing market, he acknowledged that supply and affordability issues remain the greatest threats at the moment.