It’s no secret Denver real estate prices have been on an historic climb over the last three years. While other parts of the country remain flat, a few select cities including Denver have been in super-sonic growth.
All of the growth has created a rough road for Denver home buyers. Struggling to compete for a limited number of properties, rising prices have some buyers finding themselves pushed out of the market completely. Rising interest rates will only make it worse.
Sellers, unwilling to become buyers themselves, have sat on their properties waiting for a better time to make their move, keeping inventories historically low. Super low inventory and continued price increases have been the norm. Through all of the competition this creates, are there any deals to be had in Denver?
Finding the Deals
Even in this blazing hot market, it is possible to find a deal in Denver real estate. Single family homes statistically show a 3.5% difference between the asking price and the final sale price. This is on average a three percent discount for the buyer.
According to RE Colorado, the median asking price for a detached, single family home in the Denver metro area reached $425,000 in June 2017. The median sold price for June was $410,000. This means homes sold on average for $15,000, or 3.5% less than the asking price.
But here’s the catch; the higher priced homes were the ones with the lower sold prices.
Homes selling for $400,000 and more sold for 4.5% less than their asking price in June. This helps explain why sellers in the higher price ranges are taking a little longer to sell, and getting less than they planned.
The opposite is true in the single family detached homes under $400,000. Sales in this range were 1.5% higher than asking price, showing the continued high demand and lack of inventory in the lower priced homes.
Why the Difference?
Higher priced homes have a smaller universe of potential buyers. The higher the price, the fewer people there are who can afford to make the purchase. There has been a lot of demand in the over $400,000 level for the last couple of years, but demand is beginning to lighten. Part of the difference is in new construction.
New home builders and their hammers are in full swing across the entire Denver metro area. New neighborhoods are popping up all over. But don’t plan to buy a low-cost home. In general, builders are maximizing their potential profits by building homes in the higher price ranges, meaning over $400,000. This softens the demand for the higher priced homes, yet doesn’t add much relief for the under $300,000 buyer.
Here’s The Deal
Deals can be found in Denver. They are in the higher priced homes. There is more inventory, extended time on the market, fewer buyers, and in general more room for negotiation. If you can afford the higher end, opportunity awaits you.
Deals on the lower end are still elusive. Even investors are having the same issues. Where they typically buy on the low end so they can fix and sell for a profit, the competition from home buyers with few choices is leaving them with no inventory and no margin. Buyers in the Denver market will take properties in just about any condition, just so they can get a home.
The small shift we are seeing in the higher end homes is likely a sign of a changing market. The change from a seller’s market to a buyer’s market