How to Get the Best Results with Your Real Estate Transactions
July 12, 2019
June 2019 Significant Sales
July 16, 2019

723 S Clayton Street, in Denver, is listed by LIV Sotheby's International Realty broker Rochelle McNaughton for $1,800,000.

Denver’s inventory of homes available for sale remains below national averages and is lower than most metropolitan cities. The good news for buyers is that inventories are growing and it is taking a little longer for homes to sell. Inventory levels traditionally rise over the summer months and are currently the highest since 2013 with over 9,500 active listings. That said, there is still only about two months of inventory available as we approach mid-July.

For the sellers pricing their homes at the top of this evolving market thinking there is no ceiling, and to the buyers waiting for some bubble to burst so they can buy their dream home in a foreclosure sale … neither scenario is a reality. Currently with Denver only having two months of available homes on the market (nationally the home “For Sale” inventory is around a four-month supply) the foreseeable future of real estate looks to be nicer and easier. According to the National Association of Realtors (NAR), a seller’s market is when there is a three-month supply of available homes on the market. NAR considers a well-balanced market to carry a four to six-month supply of homes, and a buyer’s market kicks in at greater than a six-month supply of available homes to be absorbed.

Our Metro Denver market has been exceptional since the second half of 2012 and remains very good. When you read or hear about prices dropping, it is not a bubble bursting but much more a seasonal shift. The greatest level of price appreciation takes place between February and June, ever since 2012. Supply of “for sale” homes increases during the spring season and continues into the summer. Sellers tend to hope and believe that values will continue climbing when in fact they have leveled off as supply increases, amplifying the seasonal trend of softening demand. Megan Aller of First American Title said it best in a recent article, “Buyers looking for increased affordability will be rewarded in July-October with more frequent price reductions. For a bubble to burst, there must be rising prices and rising inventory well beyond the point of balance.” Cities like Phoenix, Miami, and Las Vegas were experiencing 25-35% annual appreciation and were highly overbuilt…Denver is not in that world.

Make decisions that are right for you now. Don’t wait for the market to be perfectly ripe because you can almost never find that and will miss out on many personal and financial rewards over months or even years. Another current and future reality for inventory levels is, we have entered a “Homebody Era.” Homeowners are holding onto low interest rates and paid-off mortgages as they age-in-place, resulting in fewer people moving.

For about 20 years prior to the recession, the average tenure of a homeowner averaged between seven and nine years. During, and just after the recession, that time frame was about six years. As of May 2019, that number became 11 years as reported by Inman.com. Very low rates and accrued home equity, as well as technology and healthcare improvements, have made aging-in-place more possible. Plus they enjoy a sense of pride in owning their home while growing personal wealth.

In response to questions asked by some of my sellers about current buyers’ desires and trends, the following observations may be helpful:

  • Buyers who find “move-in ready” homes with desired amenities and décor will pay a premium.
  • There are still buyers looking for homes in “original” condition hoping to pay fair value and improve the home with sweat equity. This buyer used to represent a large percentage of the market but is now diminishing in favor of homes they can just move into and hang artwork. They will pay more for finished properties like what they’ve seen on HGTV. They are less willing – or capable – of fixing up a home, but know exactly what they like when they see it.
  • The last group are contractors and flippers looking for a distressed property that is profitable when fixed-up.

Homes in the middle category are being forced into the last category and need to be priced accordingly, making it frustrating for sellers. If you hire a smart, experienced broker to help weave through the nuances of the market, many opportunities are available to you.

Comments are closed.