Everything you need to know about Denver’s current real estate market is contained in this chart.
Take a look at it and begin to absorb what it’s telling us.
What you see are two lines, a solid one and a dotted one. The solid line shows the inventory (i.e., the number) of homes for sale in metro Denver every month from January 2008 to January 2018. The dotted line shows the number of homes sold every month. You can see that the inventory peaked in July 2008 above 25,000 homes for sale. That was at the depth of our economic and housing downturn, when fear ruled our market. Banks were being shut down, our local and national economies were in shambles, unemployment was rising, and consumer confidence plummeted. The result of course was that people didn’t want to buy homes; they were afraid of the future and didn’t want to take on any risk. On the seller side of the equation, many home owners were getting caught with rising monthly mortgage payments as their Option ARM mortgages adjusted upward, so suddenly they wanted to sell at the very worst time possible. It was the perfect storm.
It’s simple economics: if you have more supply than demand prices start to fall and that is exactly what they did from 2007 to 2009. Around 2010 and 2011 the market became roughly balanced with 15,000 to 20,000 homes on the market. As you can see, the market did not remain balanced for long because the supply continued to fall.
Which brings us to today’s market. In January 2018, there were fewer than 5,000 homes on the market, the fourth January in a row of near record-low inventory! This lack of inventory defines our current housing market.
It’s interesting to see that while the solid inventory line has dropped dramatically the past eight years, the dotted number of sold properties has barely inched upward, even though our population continues to rise about 1.5 percent per year. This tells me that our demand for housing is going to stay very strong for the foreseeable future.
So what should you expect if you’re planning to purchase and/or sell a home in this current market?
If you’re planning to buy a home:
Expect competition at any price point in any area around the Denver metro area. Yes, some areas may have slightly higher inventory than others (which may lead to a more balanced negotiation), but that scenario is the exception. It’s so common to be showing homes to my clients while other agents/buyers are present. Most of the time, it’ll feel more like an open house than a private showing. When you’re ready to make an offer, put your best foot forward. If it’s a home you truly love, go all in. Price of course is an important part of the offer that will significantly impact the seller’s decision, but there are other things to consider: How will you handle a low appraisal? How will you handle the inspection? Are there contingencies you can remove from the contract? How quickly can you close? What type of financing are you using? Who’s your lender? If you’d like to chat about offer strategies, let me know. I’d be happy to discuss strategies my clients have used to find success around the greater Denver area.
If you’re planning to sell a home:
Sellers are doing very well in this market overall – it’s no surprise. However, sellers make the best of the current market dynamics when they agree to price the home correctly, prep the home effectively, and market it to the max! Would you believe that in just the last 7 days 348 homes expired from the market? That means the home never sold and was pulled from the MLS – even in our current market! If you do the fundamentals, you can expect to experience great showing activity which will lead to offers (and the more you have, the better they’ll be typically!). If you’re going to sell your home, go all in. Consider the time and money spent as an investment – would you spend $1 to make $4? I hope so! To chat about my marketing strategy and what actually goes into selling a home, let me know. We can discuss many things like home prep, staging, photography, internet exposure, pricing, the listing process, required documents and disclosures, etc.
Thanks for taking the time to read this latest update! If there’s a topic you’d like to know more about, please don’t hesitate to reach out today. Looking forward to hearing from you. Have a great day!