How the Resurgence of ‘Home’ is Impacting Denver-area Housing

Market Trends Report - October 2020

By Nicole Rueth - October 4, 2020

The 5,301 active listings at September’s month-end represented the lowest amount of active housing inventory available on record for any month of September by 2,215 properties. This translates into the toughest market to buy a home in metro-Denver’s history according to DMAR Market Trends Committee Chair and Metro Denver REALTOR® Andrew Abrams.

In September 2020, there were 3,041 single-family homes available for sale, a decrease from the previous low of 5,693 in September 2017. The median days on market in the entire residential market was six, which was three days lower than the previous record set in September 2015 and 2016. For both single-family and condo homes, there were more closed and pending transactions than ever before reaching 5,850 homes that sold and 6,376 homes in pending status.

Housing inventory can’t keep up with the high level of homebuyer demand. This is further evidenced in that the months of inventory hit an all-time low at 0.91 months, signifying a very strong seller’s market. The previous record low was this past August 2020 at 0.92 months.

Furthermore, the median home price for both single-family and condo homes hit a record-breaking high at $510,000 and $334,752 respectively. The total sales volume of $3.15 billion represents the highest amount for any September on record and the third-highest month of all time.

These records, along with various other contributing factors, set the tone for why metro Denver is increasingly such a competitive market.

According to Abrams, there are several explanations for why the market is so competitive right now; not all of which can be explained by data. He stated, “Home sellers are hesitant to sell as the thought of moving and logistics of that process may feel daunting during a pandemic. The majority of sellers have enough equity to not feel pressured about what will happen with the market if there is a shift in the near future. Homebuyers, on the other hand, may be spending a great deal more time at home and realizing they want more space, while also looking to take advantage of the low interest rates.”

Our monthly report also includes statistics and analyses in its supplemental “Luxury Market Report” (properties sold for $1 million or greater), “Signature Market Report” (properties sold between $750,000 and $999,999), “Premier Market Report” (properties sold between $500,000 and $749,999), and “Classic Market Report” (properties sold between $300,000 and $499,999). In September 2020, 336 homes sold and closed for $1 million or greater, down 10.64 percent month over month and up 80.65 percent year over year. The closed dollar volume in the luxury segment in September was nearly $514.1 million, down 12.66 percent month over month and up 72.43 percent year over year. Year to date, the Luxury Market has 15.1 percent more sales volume than 2019.

“Sellers are falling in love with the Luxury Market in Denver!” said Brigette Modglin, member of the DMAR Market Trends Committee and Metro Denver REALTOR®. “With lower mortgage rates, more people working from home and remote learning for kids, buyers can really live anywhere these days.”

Year over year, 80.65 percent more luxury homes sold in September. According to Modglin, more homebuyers seem to be wanting single-family homes compared to condos in this price segment. Year over year, 87.2 percent more single-family homes closed. The luxury condo market is also still showing signs of strength with 31.82 percent more sold compared to 2019.

“Sellers were having to think fast and figure out their next move because the average days on market for a luxury home was down 39.47 percent year over year at 46 days and down 9.80 percent - five days less - from the previous month,” adds Modglin. 

Compared to last year, new listings were up 25.84 percent in the Luxury Market while pending listings were up a whopping 116.15 percent in September. Single-family luxury homes were also hot in September with a 125.3 percent increase in pending sales compared to this time last year. The luxury condo market was just as hot with a 57.69 percent increase in pending sales going under contract from one year ago.  

The highest-priced single-family home sold in September was $5.5 million, representing five bedrooms, seven bathrooms and 9,324 above ground square feet in Cherry Hills Village. The highest-priced condo sold was $2.65 million, representing four bedrooms, six bathrooms and 4,870 above ground square feet in Denver. The REALTORS® representing the buyers in both transactions are DMAR members.

nsions as homes valued $1M+ experienced 55% more homes sold in July 2020 than July 2019, pushing the average single family detached average above $601,863 – a 10% increase over last year.

Speaking of McMansions, the two highest priced home sales in July were a $7-million-dollar home in Boulder and a $5.985-million-dollar home in Cherry Hills Village.

For each week in July, Denver ranked in the top six housing markets in the nation by Realtor.com’s weekly measure of market recovery - and we felt it! 6,664 homes closed in July which came from June’s record number of pending home sales, breaking the previous record of 6,230 homes closed in June 2017. Low-interest rates and pent-up COVID-19 demand pushed record-breaking, short-term stats. Demographic changes will benefit the long-term outlook by further increasing housing market demand.

Low-interest rates not only fueled demand, but gave buyers a Christmas present in July! As I noted, the average closed price for a single family detached rose to $601,863, up from $547,537 in July 2019. If I calculate a payment at today’s 2.99% interest rate with 20% down for the median home price compared to a year ago, home buyers are now saving $43/mo.

Now is the time to stop paying your landlord’s mortgage and move into a position of wealth and stability.

What keeps me up at night? The stock market. As CNN’s Fear & Greed Index moves further into Greed and Citigroup’s Panic/Euphoria Index points towards extreme Euphoria, both point to lower stock prices within a year.

All signs point to an excruciatingly long economic recovery as COVID-19’s death toll increased to 155,000, positive cases doubled with no hint of slowing down, high jobless numbers and unemployment claims, and Yelp’s business tracker shows another 15,742 businesses closed permanently in July.

Real estate, however, continues to show strength. Looking to September’s market trends report covering August’s data, July has a potential record-breaking 7,122 pending home sales - 27.47% higher than September 2019. Dream on.

Your Partner in Building Wealth through Real Estate,

Nicole Rueth
The Rueth Team of Fairway Independent Mortgage Corporation

DOWNLOAD the report here!

 
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