Denver can expect fewer bidding wars this spring, says Libby Levinson, a Kentwood Real Estate realtor in Cherry Creek. The city’s gangbusters housing market is still a seller’s game, but appears to be slowing down.
Inventory (of the single-family and attached home variety) increased 36 percent this past March when compared to March 2018, according to the latest Denver Metro Realtors Association (DMAR) report. This meansm that more homes were listed on the market than could be absorbed by the market—i.e. houses took longer to sell than last year, too. Levinson says the increase of housing supply is leading many sellers to scale back their asking price as homes spend more time on the market, an average of 31 days in March.
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“[Last year] sellers could price their house a little bit above fair market value and still get a bidding war,” Levinson says. “Those days aren’t happening anymore.” She says her inbox is flooded with “price reduction” e-flyers.
This means the process of buying a home is getting a little easier for buyers—with more supply, the competition to get something under contract isn’t quite so fierce now as it was last spring, when buyers often offered 5-10 percent above asking price to get their foot in the door. Buyers and sellers should also note competition is decreasing most in the suburbs, but Denver’s urban core, Levinson says, is still a hot market. And while average days on the market increase across the Denver-metro area, don’t expect fair-market prices to decrease. The region’s median sell-price is holding close to steady, with a 1.5 percent year-over-year increase in March (it’s currently at $415k), according to the DMAR report. Inventory of available homes has been incredibly scarce in recent years. Now, it’s just a little less so.
The current diffusing of competition is all part of the normal real estate market cycle, Levinson says. Generally speaking, housing markets shift from favoring sellers to favoring buyers about every seven years. Colorado’s real estate market still favors sellers, but after about six years of head-spinning growth, it’s just about due for its next switch.
For the state’s luxury market, that is homes priced at more than $1 million, that shift has already happened. At the highest prices, sellers and buyers have no more advantage than the other. If this news registers above your tax bracket, don’t be too quick to disregard. The change at the top of the market could be significant for the rest of us. Historically speaking, Levinson says, the health of the luxury market has been a harbinger of things to come.
“In that higher segment, if things start shifting, people aren’t as willing to spend the big money on luxury homes,” Levinson says. “It starts to be an indicator of what’s happening in other price spans.”
In short, don’t hold your breath for lower prices, but enjoy the luxury of taking the time to find the perfect house in this (slightly) less competitive market.