2021 is coming in hot!
Welcome to Market Monday, where we review the Denver real estate market and break it down into clear and informative bites! If you have any specific questions or areas of the market you’re curious about, reach out and I will do my best to get you an answer.
The 2021 housing market is certainly coming in like a lion - tremendous buyer demand is causing a rush on new listings, resulting in an incredible amount of showings (I’ve heard in the 100-120 range) and offers (I’ve written three in the past 2 weeks that were competing against 20-25 others), which in turn result in listings selling for way WAY over list price.
Part of the big over-list surge that we’re seeing is (perhaps unsurprisingly) the list price! The risk of even slightly overpricing your listing (causing it to sit on the market, requiring one or more price reductions, no flood of offers, etc) is much greater than underpricing (and letting the multiple offers bid it up). I don’t believe the underpricing is malicious - agents want to be conservative on pricing, given all of the unknowns right now. When you see something selling for $55,000 over list, keep that in mind. The other piece is buyer demand - there are just SO many buyers who 1) want to buy and 2) are ABLE to buy right now.
With that small rant out of the way, let’s dive into some numbers!
Take a look at the Denver Metro Association of Realtors’ Market Overview for December 2020. In looking at all residential listings for 11 Metro Denver counties, active units are down 25.59% from November, and 49.55% from December 2019! Average close price is at $547,461 ($616,895 for detached and $391,375 for attached). Closed transactions, while down from November, are still up from December 2019 - that monthly dip is likely only an result of low inventory and not indicative of reduced demand.
More on inventory: Detached active inventory is down 60.83% from this time last year, with only 1,316 units. That low number, combined with the continuing high buyer demand, means that we only have 0.4 months supply of DSF inventory. The months supply of inventory measurement means that, if no new listings came on the market, keeping the current level of demand, we would run out of listings in less than 2 weeks.
While pending and closed transactions are down from last month, they’re still up from this time last year, indicating that all of the inventory is getting gobbled up. 🦃
Attached single family (ASF - condos, townhomes, duplexes, etc) is seeing a similar story in the numbers - active listings are down 26.20% from last month and 26.95% from this time last year, while pending and closed transactions are following the same trend as detached - down from last month, but still up from last year. Days on market are actually up 24% to 31 (compared to detached, which is holding steady at 20 days), so overall condos and townhomes are not quite in the same frantic flash-sale frenzy as detached homes (though this is just an average, and your experience may vary)!
I wanted to also touch on active units vs. closed units. Take a look at this graph - it shows active listings and closed transactions at the end of each month. The yellow line is active units - you can see how much inventory we had back in the 2008-2011 housing crash and beginning of recovery. You can also see that line plunge to where we are now (2,541 active listings). Despite the massive changes in the inventory line, closed transactions (the blue line) has remained relatively steady, riding the seasonal rise and fall each year. Even with how crazy and competitive the market feels right now, closed transactions are only slightly up, and not really out of the ordinary rise and fall that we see each year.
If you are thinking about buying (or out in the market trying to buy right now), you may look at this and feel overwhelmed, frustrated, or hopeless. I hear you, I feel you, and I’m with you! It takes a proactive approach, quick action, strong communication, and creative negotiating to get you under contract.
If you’re thinking of selling, there’s no need to wait for the new year if you don’t have to - the demand is fierce, and that puts you in the driver’s seat! Buyers that are out in this season are generally motivated and serious - it’s a great time to get in front of them!
If you want a guide and advocate to help you seize that opportunity, I would love to be of service. Email, call, message, text… I’m here and I want to help you with a strategy to win.
Questions or Comments? Leave them below or contact me at the button!
Numbers and stats from Denver Metro Association of Realtors.