The real estate market continues to be volatile in Denver as prices rise, inventory hits an all-time low, and buyers continue to struggle in the strong seller’s market. But the tide may be turning. Is Denver on track for a normalized market?
The number of homes for sale in Denver were at an unprecedented low in January. Fueled by a weak round of new listings in December, low inventory created higher than normal competition for buyers. It has not been uncommon to hear of homes with eighty showings and twenty offers in the first weekend. Going under contract within hours of listing, it has not been unusual to see most homes for sale gone within a week of hitting the market.
The Shift to Normal
As quickly as the surge comes in, it shifts as well. If it seems like it just got a little easier to purchase a home in Denver in the last two weeks, it probably did. In March we saw 7,800 new properties listed, which is a 23% increase over March 2016, and a 50% increase from February of this year. This surge of listings was far ahead of home sales for the same month, easing the buying pressure.
This could be a sign of a more normalized market. There is still an expectation the market will stay strong for the next 24 to 36 months. Combine the ongoing strength with more balance between buyers and sellers and its practically a recipe for utopia. Sellers still sell without much trouble, and buyers have the opportunity to be a little more selective in their purchase. Normal can be good for both sides.
Building, Building Everywhere
The astronomical demand for homes in Denver over the last 3 years sparked a building spree from the Broomfield to Castle Rock. New home developments are popping up everywhere with home builders lightening the pressure for buyers. With the new home building cycle finally catching up, overall inventory in the market should continue to improve.
Condominiums are still at a premium, with construction companies shying away from condos and building apartments instead. There is current legislation that would reduce liabilities of condominium builders, which would quickly shift the focus from apartments to condos. Until this legislation passes, condominiums will be in high demand.
Is the 2017 Outlook Changing?
Does this potential shift in the supply and demand for housing change the outlook for the remainder of the year? Probably not. In many areas and certain price ranges, competition is still very high. The forecast for 2017 is to see a continued, but smaller increase in home prices, with demand remaining high. Even with builders catching up to the market and providing more new inventory, local rents are still sky high and the area population continues to increase. Even in a more normalized market, sellers will remain in control.
In terms of home prices, we have potentially hit the top of the market. Hotter geographical areas will continue to see price increases, but some areas are slowing down and leveling out. If we do move to a more normal market, prices will certainly stabilize.
In the bigger picture, as the national economy continues to respond positively and grow, it’s continued good news for the local real estate market. Looking forward, a more normalized market would be beneficial to the Denver market with another hot summer of real estate on the horizon.