After the economic shutdown from the Covid-19 Pandemic, the Denver real estate market
appeared to be in a perilous position. Talk of the imminent collapse of the housing market was
bantered about for a while. The question being asked was when the housing market would
crash, not if it would crash.
Yet the predictions did not come true, and far from it. While some agents found ways to keep
selling real estate during the two-month lockdown, once the Stay-At-Home order was lifted, real
estate agents were back in business and home buyers came out in droves. Ready to purchase,
buyers gobbled up inventory as fast as it came on the market.
Where We Stand
The grim predictions of huge inventories of homes sitting on the market, with price reductions
have simply not played out. In fact, there has been such a run on existing home inventory that we
remain in a strong seller’s market. Lawrence Yun, National Association of Realtors Chief
Economist said last week, “If 20% more homes were on the market, we would have 20% more
sales, because demand is that high.”
The big demand from buyers on a limited amount of inventory has pushed Denver home prices
to a median average of $455,000, up 7% from this time a year ago. Median days on market is
down 33% from last year to just 10 days, leaving less than a month’s worth of available
inventory, which is down almost half from a year ago.
As we entered into the initial Covid-19 crisis, the Fed lowered the interest rate to 0%, helping
mortgage rates drop to their lowest levels in history. The lower interest helps buyers overcome
the continued price increases we have seen for the last several years.
People on the Move
Between the pandemic hitting the populated urban areas, combined with the civil unrest in cities
across the country, Colorado is seeing urban flight from Denver to the rural and mountain areas.
In a Denver Post article by Aldo Svaldi, home sales and price records were set all across
Colorado in July. “Sales are up sharply and the available inventory is falling like a rock in
Durango, Crested Butte, Glenwood Springs, Mesa County, Pagosa Springs, Steamboat
Springs, Telluride and Vail, according to the Colorado Association of Realtors,” says Svaldi.
This isn’t to say that property isn’t selling in the city of Denver. In August 2019, Denver sales
accounted for 18.5% of all home sales in the Metro area. In August 2020, Denver sales were
almost identical at 17.7%. While other areas of Colorado may be seeing an increase in sales
activity, Denver is still a preferred location for many residents.
This has been an unusual year to say the least. There was a question of whether we would see the typical
Spring selling season, as the pandemic had everyone locked in their homes. In hindsight, it
appears the pandemic pushed the season forward. Home sales have been strong throughout the
summer months with high buyer competition, increased values, and over-asking-price offers.
Heading into Fall we should expect to see the typical decline in activity, although urban flight
may remain a factor for some time.
There is a hint we may see interest rates begin to rise from their historic lows. The Fed met this week and determined they would leave rates alone for now, but encourage an increase in inflation. This could ultimately push home loan rates higher.