Colorado real estate market lacks inventory: what that means for consumers
Ever since the end of spring, real estate markets across Colorado have been surging with homebuying activity. Low-interest rates on 30-year mortgages coupled with the transition to working-from-home for many consumers, encouraged a boom in home buying.
According to the Monthly Market Reports from LIV Sotheby’s International Realty (LIV SIR), various communities along the Front Range have seen spikes in the number of homes sold through November of this year. Homes sold in Denver Metro grew by 22% in a comparison of last month to November of 2019, illustrating the upward trend of buying activity.
However, in November the available inventory of homes for sale dipped by 29.16% in Denver Metro, leaving buyers with just 3,415 listings to choose from, according to data from the Denver Metro Association of REALTORS® latest market trends report. Some consumers may be wondering how the low inventory will affect the selling streak that Denver Metro has been on for the last several months, but this community is no stranger to low inventory.
For years, Denver Metro and its surrounding communities have dealt with a lack of inventory of available homes for sale. Over the last five years, inventory has hovered around a two-month supply of inventory, as stated in the most recent Metro Denver Market Review for detached single-family homes from Megan Aller of First American Title. For reference, a market in equilibrium has a six-month supply of inventory. This means that in recent history, Denver Metro has been a seller’s market in which buyers must compete more aggressively for a smaller pool of available homes.
This phenomenon is also being experienced south of Denver Metro, in the highly sought-after community of Colorado Springs. LIV SIR broker, Eric Scott, explained that these conditions are expected by buyers at this point.
“Everybody knows that the market is tight for buyers right now across Colorado and much of the country,” said Scott. “According to the Pikes Peak Multiple Listing Service (MLS), there were 675 total single-family homes available at the end of November in El Paso County where the population is roughly 740,000. This supply and demand dynamic is driving our market forward organically versus speculatively – this shows that people want to live here.”
Fewer homes on the market and an increase in homebuying activity mean that buyers should be prepared to place competitive offers on the homes that they have their hearts set on. Not only will buyers need to be more aggressive with their offers, but they will need to make decisions about listing more quickly. Houses are moving off of the market fast, with homes spending an average of just 24 days in the MLS in November, a 31% decrease from the same month in 2019, as reported in LIV SIR’s monthly market report for Denver Metro.
LIV SIR top-producing broker, Anne Dresser Kocur can attest to the need for flexibility from consumers in a market where the process of buying or selling a home is faster and more competitive than ever.
“We have seen record-breaking interest rates which brought an influx of buyers into the market, creating an ideal scenario for sellers as buyers push to close by the end of the year,” observed Kocur. “Like the rest of us, buyers and sellers have had to pivot in these ever-changing market conditions in order to achieve their buying/selling goals.”
As the year comes to a close and the new year begins, new homes may come onto the market, bringing more balance to Colorado’s real estate markets across the state. If 30-year mortgage rates remain low in 2021, both buyers and sellers will continue to have the opportunity to take advantage of a prosperous real estate environment if they have not already done so.
“It is hard to know what the 2021 real estate market will bring; however, I remain optimistic the activity will continue to increase based upon low-interest rates,” commented Kocur.