With 5.36 percent month-over-month appreciation and interest rates increasing, an individual's buying power steadily declined. While 2020 and 2021 took different paths, there is one common denominator: hyperactive buyer demand.
The first two months of 2022 were dictated by a lack of inventory and sales. By the end of February 2021, 8,761 properties hit the market. In 2022, the market has only seen 7,671, a 12.44 percent decrease in listings in two months. This number directly correlates with the 13.31 percent decrease in closed properties so far this year. The lack of supply coupled with the surplus of buyers has caused prices to rise quickly, leading to an unprecedented close-price-to-list-price ratio of 104.75 percent.
“Last month, I had clients close on a house for $10,000 under asking price in the same week that I had clients close on a house $250,000 over asking price,” commented Andrew Abrams, Chair of the DMAR Market Trends Committee and Metro Denver Realtor®. “The biggest difference between the two was location and condition. With so many properties closing six figures over asking price, Realtors® must take a deep dive into their responsibilities as we wear a lot of different hats: therapist, analyst, driver, motivational speaker and, most importantly, educator. Our job is not to make decisions for our clients, but to help guide them. That means not just providing comps but also an explanation of the comps. Explain the market stats and what it takes for a buyer to get under contract and then let them decide their own fate. In an emotional market, the data still matters.”
Our monthly report also includes statistics and analyses in its supplemental “Luxury Market Report” (properties sold for $1 million or greater), “Signature Market Report” (properties sold between $750,000 and $999,999), “Premier Market Report” (properties sold between $500,000 and $749,999), and “Classic Market” (properties sold between $300,000 and $499,999).
The Luxury Market was alive and well in February as it continued to show strong growth. month-over-month, the sales volume increased 43.14 percent for detached homes and 32.04 percent for attached. The market also saw an increase in listings above $1 million, with 434 new listings in February compared to 330 in January. The increase in listings was a welcome sight; however, the intense demand absorbed those listings quickly, with 97 percent of new listings going under contract in February. In general, the Luxury Market has less than two weeks of inventory for both attached and detached homes.
The median days in the MLS was just five days for detached homes and three days for attached homes. Most properties within this price segment will go under contract within the first week of hitting the market. In February, the close-price-to-list price was 105.52 percent, up 3.61 percent month-over-month and up 5.84 percent year-over-year. New listings year-to-date for properties over $1 million, for both attached and detached, were up 17.18 percent, while the market as a whole has seen a 7.44 percent decrease in new listings compared to this time in 2021.
“A feeling of uncertainty rests throughout the Luxury Market as the pandemic stressed the supply chains while demand hit all-time highs,” said Amanda Snitker, DMAR Market Trends Committee member and Metro Denver Realtor®. “With the recent Russian invasion of Ukraine, the Luxury Market could be one of the first to show signs of stress. Many buyers cash out stocks or cryptocurrency to purchase more expensive homes or second homes; with the volatility of the financial markets, this may cause pause for some. Spring is seasonally the best time to sell and the Luxury Market has robust market indicators; however, with rising interest rates, financial market instability and inflation, now may be the best time to make your move.”
Thank you to our partners at the Denver Metro Association of Realtors for compiling this information.
