How Low Can It Go? Record Low Inventory Is Driving The Denver Real Estate Market
Ask any economist what drives the market and they will tell you supply and demand. Currently the Denver real estate market has the lowest supply and the highest demand since we started keeping track of these statistics. As of the end of May 2021, there where only 2,510 units available in the 11 county Denver metro area. Compare this to 9,066 which is the average for the same time period over the past 5 years – our inventory is down over 72%. If you have been considering selling your home, we need it in our inventory and you will be rewarded with record high sales prices!
NOTE: Statistics are taken from Greater Denver Metro Counties: Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park
The best way to read this post: The majority of this post is comprised of me analyzing different metrics to break down what is happening with price, supply and demand across different segments of the Metro Denver real estate market. This helps me determine where the real estate market has been, where it is now and forecast where it is likely to be in the near future. If you are a stats nerd like me, you might enjoy reading the entire post, if not - skip to the summary at the end of each section, or all the way down to the overall Denver real estate market review and Denver real estate forecast at the end of the post. If you are reading this post on a cell phone, turn your device sideways to see the graphs in their entirety.
Metro Denver Real Estate Statistics Snapshot - All Property Types
| Latest Month May 2021 | Previous Month April 2021 | Year Over Year May 2020 | |
|---|---|---|---|
| Median Sold Price | $541,000 | $530,000 | $440,000 |
| # of New Listings | 6,788 | 7,120 | 7,571 |
| # of Active Listings | 2,510 | 3,364 | 9,749 |
| # Under Contract | 7,141 | 6,175 | 6,748 |
| # Sold Homes | 6,007 | 5,891 | 3,713 |
| Months Supply of Homes | .04 | 0.6 | 2.0 |
| Median Days on Market | 4 | 4 | 9 |
Metro Denver Real EState Prices
Median Closed Price For The Entire Denver metro MLS - All Property Subtypes
The median sold price of sold metro Denver homes (single family detached and attached) rose to $541,000. Prices as a whole are up 22.9% year over year from May 2020.
Median Closed Price - Single Family Homes
The median sold price of single family detached homes (houses) rose to a new record high of $600,000. The average sales price for a house in the Denver area is up $126,000 higher than this time last year.
Median Closed Price - Attached (townhomes and Condo)
The median sold price for condos and townhomes in Metro Denver rose to $385,000. Prices are up 17.5% year over year from May 2020.
Pricing Summary
Prices continue to rise. Up 2.1% from last month and 22.9% year over year. Typically June is the month we start to see prices go down – will this year be different?
Metro Denver Real Estate Supply
New Listings - Metro Denver, All Subtypes
Only 6,788 homes were listed in May which is 12.5 % lower than an average May and 353 less than the number homes that went under contract in May.
Homes For Sale - Metro Denver, All Subtypes
The supply or inventory of homes for sale in the Denver metro area remains incredibly low. Only 2,510 homes were available for sale as of May 31 2021 – 74.3% less than the same time last year.
Supply Summary
Already record low inventory levels + fewer new listings then normal + 353 fewer new listing came to market than went under contract = not a good formula to bring our inventory back to a healthy level. Inventory dropped again to a new record low. May is typically 4 months into our upward climb to the inventory peak during August or September.
Metro Denver Home Buyer Demand
Sold Homes - Metro Denver, All Subtypes
6,007 homes sold throughout the metro Denver real estate market in May 2021, down slightly from our average.
Pending Sales - Metro Denver, All Subtypes
The pending homes sales metric is the best indicator of our current market because it is our most recent metric and tells us how many homes went under contract during the month of May, while closed sales and sold prices in May show the results of homes that went under contract months ago in April and late March.
We saw a near record number of homes go under contract in May which is typically the month when the most homes go under contract.
Demand Summary
Despite record low inventory, record high prices, bidding wars and escalation clauses, demand is still near an all time high.
Interest Rates
According to Bankrate.com’s Rate Trade Index, “Mortgage experts expect favorable conditions for borrowers in the week ahead (June 10-16). In response to Bankrate’s weekly poll, 54 percent said rates will drop while 31 percent said rates will remain the same and just 15 percent said rates will rise.”
Today’s Most Prevalent National Rates as reported by Bankrate.com.
- 30 YEAR FIXED – up slightly to 3.09% compared to 3.06% last month.
- VA – up to 2.77% compared to 2.68% last month.
- FHA – down to 2.85% from 2.86% last month.
- 15 YEAR FIXED – up to 2.36% from 2.34% last month.
- 5 YEAR ARMS – up to 3.24% from 3.16% last month.
Denver real estate Forecast and market review
Pricing – Overall, all segments of homes throughout the metro Denver area rose 2.1% last month and 22.9% year over year. The increase was lower than the 6% we saw last month which could be a sign that prices will begin to stabilize.
Supply – With 72% less inventory than we have on average this time of year, we continue to see fast sales at top dollar with multiple offers over list price and crazy terms such appraisal gap coverage and escalation clauses. The median days on market for single family homes during May was only 4 days!
Demand – We nearly caught the record high homes going under contract which happened last July. In the Denver area, more homes typically sell in June and July than any other months.
What’s Next For The Denver Real Estate Market? – My Denver Real Estate Market Forecast: – May and June are historically the 2 months with the highest number of new listings coming on the market. I think that we will see the listing market extended a few months and continue to see a high level of new listings through July or August. July and August might be when prices finally start to stabilize before a slight decrease starts in September or October.
My Advice For Potential Sellers – Right now is still the best time ever to sell you home in the Denver area. If more homes come on the market, prices will correct then stabilize and offers of tens of thousands over listing/market price will go away.
My Advice For Buyers – If you want to buy in this market, you have to be aggressive and patient at the same time. You will be competing with multiple offers and will probably need to be willing to overpay in this market or wait and hope it stabilizes.
Is a Wave of Foreclosures on the Horizon? – Maybe, but it will not have much of an effect on our market if it does come. Unlike in 2008, most homeowners in the Denver area have equity in their homes today. When the moratorium for foreclosures is lifted, these homeowners can either modify their loans or sell their homes at a profit rather then letting them fall into foreclosure. The homes that do go into foreclosure will likely be bought at auction rather than falling to the banks for REO or bank owned sales.
