As we work our way through the first few weeks of the new year we wanted to take a look at what the Denver real estate market is doing in comparison to last year. Comparing a pre-COVID market to where we now gives us insight into what we are currently seeing in the market and what we expect in the following months.
As a recap, we typically see April, May, and June as the best months for listing and closing. This is what we would call our "Spring Market." However, in 2020 those same months were the beginning of COVID closures all over the state and the country. The government responded by lowering interest rates, and local sellers responded by waiting or not putting their homes on the market. By the end of 2020, low inventory and interest rates began driving one of the most competitive seller's markets we have ever seen.
Where are we now?
Comparing January of this year to last year, we are in deeper and further seller's market territory than Denver has ever been. We have what's called a "quantity problem;" where high buyer demand and low seller inventory are making for unprecedented times.
So what's the good news?
We have an opportunity to respond to the quantity problem by implementing a "quality solution". If we know that demand is at an all-time high and inventory is at an all-time low, we can now engage in innovative solutions for both our buyers and sellers.
Denver Market Overview
The clearest sign of our market activity right now is watching how showings are occurring here in the Denver market. As of last week, the market currently has doubled the number of showings from last March/April (before shutdowns began). This means that at this rate, every 21 showings on a home should yield at least one offer. Keep in mind that many properties have between 50-200 showings in one weekend, yielding anywhere from 10-20 contracts.
For market activity across all price ranges, we saw a huge pop of activity coming into the new year. There are now only 0.5 months of inventory left in our market, meaning that if no properties came on the market it would take us less than two weeks to sell out of all of our inventory!
We are also down around 1.8% of the number of listings we had in January 2020, while the number of homes going under contract continues to rise. What's very telling of the market activity going up is the median days on the market. Right now, 50% of the homes on the market are under contract in 4 days or less.
What does this mean for you?
If you are a buyer, you will be in a multiple offer situation. Your best chance of getting any negotiating power is in the second week of a listing being on the market. While you may not be able to push too much on price, you could have more post-under contract opportunities to negotiate closing dates, home inspections, appraisal and more.
If you are a seller, you should anticipate being under contract on the very FIRST weekend. If you price correctly and market competitively you will, on average, receive an offer for 2.7% over list price. The average price going under contract in the second weekend is 98.9% of the list price. Overall, the odds of selling your home are at an all-time high of 74.5%.
Real Estate Activity at the $0k- $500k Price Range
We continue to see more competition coming into this price range. It only takes about 14.5 showings for every contract and 50% of these homes are going under contract in 4 days or less.We only have 0.4 months of inventory and we are down nearly 40% of the inventory we had in January of last year.
Buyers, be prepared to go in fighting strongly and keep looking out for any Coming Soon status properties so we can book a showing as soon as possible.
Sellers,you have a 79.3% chance of selling your home right nowso the odds are continuing to rise. Showings are happening in 15-minute increments and 50-200 showings in one weekend means a lot of activity and competitive offers flooding in.
Real Estate Activity at the $500k-$1m Price Range
There are more buyers in this price range than have ever been before and the numbers show that. We only have 0.9 months of inventory (or will sell out in about 3-4 weeks if no new homes come on the market). Higher numbers of well-qualified buyers taking advantage of their equity, low interest rates and the itch to move to the suburbs means competition is stiff.
Buyers, the cash offers in this price range are plentiful and showing demand is surging.
Sellers,you have a 72.5% chance of selling your home right now and it's rising.
Real Estate Activity at the $1m-$1.5m Price Range
Buyers, you have 1.2 months of inventory to look at which gives you 1-2 strong options to place an offer on. The median days on the market is at 11 which gives you less than 2 weeks to consider making an offer on most homes.
Sellers, you have a 63.6% chance of selling your home, which has risen dramatically. Even so, around 31% of the homes in this price range had price reductions in the last week. Pricing right and timing the market to have the most amount of buyers see your home is of the utmost importance.
Real Estate Activity at the $1.5m-$2m Price Range
Although this market lags compared to the lower-price markets, we are seeing buyer demand grow right now. Sellers, you have a 44.4% chance of selling your property while buyers have 1.6 months supply or around 3-4 homes to choose from. This market is advantageous for both buyers and sellers and working with us will help you determine what makes the most sense for your situation.
Statistics graciously provided by Megan Aller, First American Title Company
