While housing inventory typically declines around the holidays, this year hit a record low. November ended with 3,415 active listings, down approximately 29 percent from October’s 4,821 homes—the previous record—and down a whopping 51 percent year-over-year. If no new houses come on the market, inventory would be sold out in two weeks, according to the Denver Metro Association of Realtors (DMAR) Market Trends Report.
“It’s basically déjà vu at the beginning of every single month,” says Andrew Abrams, chair of DMAR’s Market Trends Committee. “The lack of inventory has continued to go down. [In September], it was the hardest time [to buy a home]. And since then, it’s gotten a little bit harder.”
Inventory levels aren’t expected to increase anytime soon either. Since 2008, active inventory has dwindled from November to December, Abrams says. He anticipates historically low inventory to carry into the first of the year.
Homes also sold faster last month than a typical November. The average day on the market was 22 days compared to 35 days in November 2019, according to the report. “We haven’t seen demand decrease,” Abrams says.
Of course, low inventory coupled with high demand lead to increasing prices. Last month the average single-family home sold for $615,766—nearly $83,000 more than a house sold in November 2019, but a slight dip from October, when the median home price exceeded $625,000. Abrams says he wouldn’t be surprised if prices continue to increase through summer 2021.
Abrams says now is still a good time to buy a home, but buyers need to have realistic expectations. “Interest rates are incredibly low, so your buying power, relatively, is still pretty good,” he says. “Even though prices have been going up, I expect prices will continue to go up. And if that’s the case and you can buy a home, you’re going to be sitting in equity as early as a month or two from now.”
The most competitive sector of the market is single-family homes listed between $300,000 and $499,999, according to the report. Last month, there were 1,284 new single-family listings in this price range, and 1,658 pending sales. “Buyer demand is so high that based on the number of detached homes on the market and the rate at which buyers are scooping them up, it would take only about a week for all of the detached homes inventory in [the $300,000 to $499,999 range] to dry up,” Drew Morris, DMAR Market Trends Committee member, said in the report.
The Denver metro area is experiencing a seller’s market in everything except attached homes—think condos, townhomes, and duplexes—priced over $1 million, which is facing a buyer’s market. With only 30 new listings and 29 pending sales last month, Abrams says this can easily change to a neutral market. Luxury single-family homes had 155 new listings and 235 pending sales.
“The reason why there’s so much competition is because of the benefits of homeownership,” Abrams says. “I think people are continuing to realize you get more space, you’re in control of your own future, and you get to build wealth and age in place all by owning property. Within the economy as a whole, housing is a really safe place to land, and that’s why things are as crazy as they are. … The market is competitive if you are a buyer and great if you’re a seller.”