The Denver real estate market has been in the news across the country the last couple of months. From New York to Hawaii, Denver is the buzz with a seller’s market that has buyers fighting for a chance to purchase a home. Pocket listings reign, with homes selling before they even hit the MLS. But get ready for a change.
Like much of the United States, the Colorado real estate market has rebounded from the painful lows of a drawn-out recession. This quiet recovery made for a great 2013 for most real estate agents. But to the surprise of many in the industry, January 2014 started with inventory levels at record lows. Without a daily dose of homes coming on the market, the seller’s market was primed and buyers were eager to purchase.
To all of this, add in the fact that the recession left a lot of cash on the sidelines while the market went upside down. Low inventory and ready reserves have been a seller’s best friend. Cash purchases have no need to align with appraised values, so home prices increased and buyers were willing to pay more than the asking price.
First quarter of 2014 has been a wild ride, but that is all beginning to change and we will start seeing a more even market. Two things happened during the hot streak in Denver. First, buyers had little inventory to choose from, so they were willing to duke it out to buy a home – any home. Sellers reaped the benefits of multiple offers and more lenient buyer conditions.
Second, homeowners who were sitting on the fence, waiting to sell, started jumping into the market. With more inventory, buyers now have more choices and are no longer in a feeding frenzy for properties. It also means homes are sitting on the market longer and are not selling within hours of listing.
This transition begins in higher priced neighborhoods, where the number of potential buyers is less than in more affordable areas. In neighborhoods where there were no homes for sale thirty days ago, now there are a half dozen sitting for more than two weeks. This trend will continue to spread to other neighborhoods over the next several weeks.
This can also be seen in a graph provided by Denver Metrolist™. The chart shown here shows the number of new listings in green. This represents the sellers jumping into the market because the market is on fire and now is the perfect time to sell. But this is changing. Based on the May numbers to date, new listings will not surpass the April listings of 9,499.
Through Q1, the blue bars represent the average number of days homes are on the market. This declined every month until May, where the average has now turned and is on the rise. This is the inventory catching up with the demand, and the market leveling out.
This changes certainly doesn’t mean the market is declining. The Denver Metro area housing market is still robust and is likely to continue through 2014. What this really means is buyers will have more opportunities to purchase, and sellers will have to work a little harder to get their asking price.