The Denver MLS now offers only 2889 detached, homes for sale in the 5 county metro area. That’s the lowest inventory of homes on the real estate market since I became a Denver Realtor. And, that streak probably goes back even before 1978 when I was a rookie Realtor. You see, records kept by the Denver MLS company do not go that far back in real estate history.
A year ago at this time, 4104 homes were posted for sale in the Denver MLS. Buyers could choose from more homes. Sellers had more competition. The market was closer to being “in balance” between buyers and seller.
This historically low lack of resale homes inventory is distorting the Denver real estate market. Buyer’s sometimes just can’t find the kind of home they want. For example, I just helped a empty nester couple finally buy a paired-home in an over 45 golf course community. We had been looking at the few number of homes that have come onto the real estate market since last October. Fortunately, we did not encounter multiple offers but still had to pay the full asking price.
Low Inventory Creates Problems
Lack of inventory presents problems for lenders and appraisers too. For instance, it can be difficult for a home to appraise at the purchase price. Appraisers have to use “comparable sales” that sold as long ago as a year. That means, they are measuring the historical value of homes instead of the current market value. Denver home appreciation has been running a 6-8% per year.
When a home does not appraise, buyers and sellers can face difficult decisions. The standard Colorado real estate contract provides that the home must appraise or the buyer can object. Of course, the buyer may need a full price appraisal in order to get a loan. Or, the buyer might regret having made a full price or higher offer. Either way, buyers can object to low appraisals.
Sometimes, Sellers will compromise the original purchase price just to close on time. Other times, they will not and either the buyers will pay a higher down payment or the house goes back onto the market. So, even Sellers can find this lack of Denver homes inventory frustrating.
Finally, Realtors are frustrated because many are not selling as many homes this year as they did last year. We need more homes to sell to meet the demand. Denver home sales this year are lower than 2017 year to date.
Average Denver Home Prices Rise
In spite of all the problem Homes are being sold at historically high prices. In fact, the Denver MLS statistics show that the average, detached home in Denver now sells for $512,478. Consider that a year ago the MLS was showing an average sale price in the five country Denver metropolitan area as $421,168. Multiple offers are continuing to drive up real estate prices.
And, homes for sale remain on the market often less than 2 or 3 days. Also, the average time on the market is down to less than 10 days for all homes in all price ranges and all areas of the 5 county metropolitan area.
As a result, the absorption rate for homes to sell is the lowest in recorded history. This is particularly true for homes priced under $500,000 and located close to Downtown Denver.
Yes, it’s a hot Denver real estate market. But, it is not an easy one. Buyers and sellers need to be nimble an their feet. So, buyers and sellers need the experience of savvy, Denver Realtor to help them navigate this difficult and changing marketplace. I suggest consumers need ethical, smart and seasoned full-tme Realtor representation now more than ever.