What is going to happen to the Denver Real Estate market as we head into fall? I had the privilege of attending a Denver Real Estate market trends class yesterday with Megan Aller from Land Title. Megan is brilliant with Real Estate statistics, and as a result, was able to share some really interesting insights that you won't hear anywhere else and help give us solid data to predict the coming months and years.
Megan's major theme for evaluating any Real Estate market is comparing our market to a balanced market. Based on her mathematical calculations, a balanced market is a market with about six months of inventory. This is neither a strong buyer's or seller's market. So let's look at some of her calculations to see the type of market we are in.
As you can see from this chart, we are in an extreme seller's market. Just seven years ago we had nearly 25,000 homes on the market, now we have around 6,000. Seven years ago there were just under 5,000 sales a month, now, there are just under 5,000 sales a month. This means that we need 32,244 active listings to create a balanced market with 6 months of inventory. That's a shortage of 78.5%! To top it off, we only have one month of inventory. That means that if no new houses come on the market, we would sell out in one month. The average for the past ten years is 10 months of inventory.
If we break it down by price point for detached, single family homes, the 200-400K range has the biggest inventory shortage. Have about 1,700 active homes and we need about 14,000 actives for a balanced market, only 12% of the needed inventory. In the 0-199K range, we have 197 actives and need 2,388. If your home is in this price, might be a pretty good time to sell.
While homes are selling faster than you can imagine, it is still very important to price it correctly and to work with an experienced agent who knows how to get you top dollar. Homes that sell in the first week sell on average for 102% of list price. By the 3rd week on the market they only sell for 98% of list price and by week 5, down to 96% of list price. So pushing the market to get top dollar isn't necessarily the best strategy if it means you sit for a couple weeks on the market.
The average home price is up $146,000 since 2009 and up 8% since last year. Is this appreciation sustainable? Probably not, but it doesn't appear like it will slow down anytime soon. With this extreme lack of supply, and thousands of highly educated people moving to Denver every year, the demand is only going to increase leading to higher prices. Megan estimates that we are on an 8-10 year cycle and we are in about year three so hold on because it shouldn't slow down anytime soon.
So for fall and winter, I expect the market to continue as it has been all year. Maybe not as many bidding wars, the hottest time of year now seems to be April and May in Denver, but still homes selling very quickly and for top dollar. If you are a buyer, you might as well jump in because prices aren't coming down and interest rates can only go up. I would expect to see a push from sellers to get their homes on the market before winter sets in so don't give up now. And sellers, is this sinking in? I know a lot of people don't want to sell because they don't know where to go. But trust us, we deal with that problem everyday and have lots of strategies we can use to get you top dollar for your home and into your next, better home, so let's talk.
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