46% more homes went under contract last week in the Denver metro real estate market, than the same week last year.
Fall season typically marks a slowing of the real estate market. We see a slight decline in home values and reduction in market activity every year. Except this year.
While an unusually high 1,534 homes hit the market last week (18% more than the last 3-year average), 1,631 homes went under contract, further widening the supply and demand gap.
Prices Pulled Back, Some. But Look at History.
The average sold price of a single-family home in Denver pulled back to a 5-week low of $606,673, with the previous high just one week ago at $639,661.
The average sold price of all (residential) property types pulled back from last week’s high of $597,332 to $575,197.
It is natural to try and draw conclusions from a price decrease. Be prepared for sensational headlines claiming the bubble is bursting and sky falling. Don’t fall prey to this sensationalism.
Let’s get a little technical.
2019 saw a week 27 (about mid-July) high sold price for all property types at $512,625 and $565,180 for single family homes. By the time we got to week 35 (last week) of 2019, the average sold price of all property types was $466,070 and $515,400 for single family homes. That is an average decline of 9.75%. (Important Note: This is the average sold price, not necessarily value. The average sold price moves based on the type of home sold. If the fall market begins to see smaller homes sold because kids are back in school and families with larger, more expensive homes aren’t wanting to move, the average sold price will decline)
Over the same period of time in 2020, the average sold price for all property types moved from $519,864 to $575,197 and $569,408 to $606,673 for single family homes. An average increase of 8.5%.
Average sold price adjustment is typical this time of year and we anticipate the market to cool some, as has been the trend in Denver for decades.
The variables many are questioning right now are the macro issues of public health, the US economy, the upcoming Presidential election, which may be the most contentious in recent history, and how these will all affect the Denver real estate market. Truth is, no one knows.
What we do know, the Denver real estate market is experiencing much higher demand than most major metro areas across the country, and continues to be a very diversified economy, capitalizing on super low interest rates.
While we don’t know how long this trend will continue, which is why we analyze this information every week, the strength of the Denver market continues to have solid fundamentals leading to positive long-term expectations.
SO WHAT THEN?
If you are a seller, recognize we are likely to experience some seasonable market adjustment. The price on your home isn’t going to continue appreciating at the same rate as it has. If you are selling between now and year end, make sure you are preparing your home properly for sale, to maximize value. And be patient, just because it doesn’t sell in a day shouldn’t give you reason for concern.
If you are a buyer, there are a lot of reasons to believe the Denver market will continue to be incredibly strong. Interest rates are anticipated to remain low, it will take a long time for any shift in the supply/demand ratio to cause any negative price adjustment and the Denver economy and population growth continue to outpace building and market supply. Be confident that buying at a 3% interest rate is way more valuable than waiting for prices to drop, which may never occur.