Listings drop to lowest point since 2016 in latest metro denver real estate market report
New listings in the metro Denver area dropped to the lowest total since 2016 in the latest market report from the Denver Metro Association of Realtors (DMAR). As mortgage rates continue to be low, buyers could not find enough properties to purchase as 2021 came to a close. It’s projected that the extreme seller’s market could even get worse in the New Year.
Metro Denver is a region with 1.4 million households, but only 1,477 homes and condominiums are available for sale compared to 2,541 at the end of 2020 and 5,037 at the end of 2019. Back in 1985, metro Denver averaged 12,652 homes for sale at the end of December. Buyers only had a twelfth of that long-term average available to them last month and 34.3 percent fewer homes than were available at the end of November.
The tragic Marshall fire has put even more pressure on January’s inventory as thousands of people are displaced and looking for replacement homes that will take years to rebuild. These buyers have only been in the market for a few days.
The lack of supply, combined with strong demand, drove record price gains. The median price of a single-family home sold in December in metro Denver rose to just under $600,000, a 19.3 percent increase from 2020. The median sales price for condos and townhomes in December was $381,500, up 15.6 percent from December 2020.
Buyers closed on 63,684 residential properties last year, only 183 fewer than in 2020. Although the number of sales was flat, higher prices drove the sales volume of transactions up 17 percent from $33.3 billion to $39 billion.
The reason for the record low inventory can be found in new listings, which fell 5.3 percent last year to 66,308. That’s the fewest homes put on the market in any year since 2016. And when those homes hit the market, they moved quickly, with half going under contract in four days or less. Back in 2020, homes spent a median of seven days on the market and in 2019 it was 13 days.
Interest rates experienced their biggest spike in two decades at the start of the year, and if that trend continues, higher mortgage rates will reduce affordability for buyers, reducing demand. But in the short term, the threat of higher rates could make buyers more desperate to lock in an attractive rate. Forecasts regarding what comes next are divided between those who think already elevated prices and higher mortgage rates will price many buyers out of the market, and those who think the limited supply will fuel another year of double-digit price gains.
The DMAR predicts the Denver housing market will remain undersupplied in the first half of the year, but could loosen up in the second half of 2022 as demand eases.