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Even as COVID-19 causes many industries to slow down or pause all together, the ongoing pandemic has seemed to have little impact on Denver’s booming real estate market.
Building on the momentum from July—when the metro area’s average single-family home price exceeded $600,000 for the first time—last month saw average home prices rise even higher, to a new record of $606,330, and nearly 6,000 homes were sold. The 11-county market is now “on pace to outperform last year’s record-breaking” numbers, according to the latest Denver Metro Association of Realtors (DMAR) Market Trends Report.
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The higher home prices were driven in part by a shortage of inventory. Last month saw 41.2 percent fewer homes on the market than August 2019—the lowest inventory for any month of August thus far. And while new listings are slightly up year-over-year, 850 fewer homes hit the market last month compared to July, according to the report.
“We were as busy as we could be with the amount of inventory we had,” says Jill Schafer, chair of DMAR’s Market Trends Committee. “I think if we would have had more inventory, we would have had higher sales and higher sales volume. So, it feels like we’re gobbling it up as quick as we can.”
Pending sales for attached and detached homes were up nearly 8 percent from July and nearly 33 percent compared to August 2019. Schafer says these numbers indicate the market isn’t slowing down like it typically does this time of year. “It’s almost as if COVID-19 just pushed [our busy season by] a month and a half,” she says. “But it may continue all the way through the winter if we don’t start seeing some inventory added, because our interest rates are so incredible, people are really trying to get in if they can.”
Across the board, the Denver Metro is still experiencing a seller’s market with the exception of condos priced over $1 million, which is a balanced market. Even homes priced over $2.5 million are receiving multiple offers—something Schafer says is uncommon.
Luxury condos priced for more than $1 million have 5.3 months of inventory available, whereas single-family homes in the same price range have 2.7 months of inventory available, DMAR Market Trends Committee member Taylor Wilson said in the report. (The shift to a buyer’s market occurs when there are at least six months of inventory available.)
In August, 354 single-family homes priced over $1 million sold—an increase of nearly 53 percent year-over-year. Condo sales, on the other hand, were down 18 percent year-over-year and inventory was up 10 percent, Wilson said in the report.
“Anything that’s a resale, it’s so competitive that people with 20 percent down or cash are winning. And people who are trying to do 5 percent down are really struggling to get something. They’re making a lot of compromises,” Schafer says. “People are going out of the area they were really hoping to be in. They’re going into smaller homes; they’re going into attached instead of detached.”
As for our ongoing inventory crunch, Schafer expects it only to continue. “It seems like the inventory shortage has been an issue for such a long time,” she says. “And I don’t see a light at the end of the tunnel.”