Andrew Guterman has been looking to buy his first home on and off since Thanksgiving 2019. The agent and lead analyst at Atlas Real Estate has submitted eight offers, seven of which were more than the asking price. Yet, he still hasn’t been able to land anything.
The problem, he says, is other buyers are offering significantly more than the list price. “Personally, I want to be optimistic but as an analyst, it’s more difficult for me to be realistic that I’ll find the right thing for the right price,” he says about Denver’s current real estate landscape.
Traditionally, the housing market hits peak busy season from late spring to mid-August and slows down in the winter months. But that hasn’t always been the case in Denver—and it especially hasn’t been the case this year.
“I’d say that our market really shifted about the second week of February,” Jill Schafer, a broker with Kentwood Real Estate, says. “It was almost like we were in drive but with our foot on the pedal. And then in February, it’s like we shifted into the highest gear you can think of with our foot on the pedal all the way.”
Looking ahead, realtors expect that feeling of being in overdrive to last through at least the summer. It’s a prediction seen nationally as consumer confidence grows. More Americans say they intend to buy a home in the coming months than at any time in the last 43 years, according to Zillow’s recent national market pulse report.
In April, Denver had nearly 17 percent more listings than in May. But more than 5,000 homes sold last month, an increase of 28 percent year-over-year, according to the Denver Metro Association of Realtor’s Market Trends Report. More homes are being put up for sale, but buyer demand is still extremely high. And homes are selling faster and for more than the list price.
“I think we’re seeing our typical spring market bringing on more inventory, but our buyer demand is so high that I think this [type of market] is going to continue for some time,” Schafer says. “So, what we thought was busy last summer, is going to be even crazier this summer.” And that could really be saying something: Last June, approximately 300 more homes went under contract than the number of new listings. And last July, the average price of a single-family home exceeded $600,000 for the first time as prices jumped $43,000 month-over-month.
David Schlichter, a realtor with Compass, anticipates a lot of interest this summer from both sellers and buyers because of pandemic-related forces. “We’re experiencing some really fundamental shifts in the world right now,” he says. “Are people going to be staying virtual or going back to the office? That’s a decision that a lot of companies are going through right now. That outcome will dictate whether people can stay in the same place or if they [relocate].”
Ultimately, there are two ways to slow Denver’s housing market, according to Lonnie Glessner, senior loan officer with Draper & Kramer Mortgage Corporation: mortgage rates exceed four percent or we experience a recession.
“Rates at 2.5 to three percent are just so conducive to buying a new home and encourage everyone to do it because the home will never get any cheaper,” Glessner says.
History backs up Glessner’s point. When mortgage rates sat at 4.5 to five percent in the second half of 2018, buyer demand slowed down locally and nationally.
While that downturn may not be coming any time soon, first-time home buyer Andrew Guterman is still holding on to a sliver of hope. “As we see more certainty that the world will open up a little more as COVID-19 dies down,” he says, “we should see a more normal real estate pattern return.”