January 2020 started off as a typical year in Denver real estate. Like past years, the first two months of the year were relatively quiet when it came to home sales, but on par with previous years. In March, buyer activity increased as we transitioned into the normal Spring real estate sales season.
But this year, the Covid pandemic and multi-county stay-at-home orders changed everything. March was off to the typical start when two weeks into the month everything shut down. Despite the lockdown, real estate sales continued, albeit at a much slower rate. Predictions of the demise of the Denver real estate market circulated, but the crash didn’t come. As soon as the stay-at-home order was lifted, the Denver real estate market took off.
Denver Real Estate is Booming
Residential real estate sales in Denver have been booming since June and continue to drive a seller’s market well into the Fall. In fact, sales are so strong that buyer demand for single family homes outpaced the incoming supply of homes on the market over the last two months.
In September 2020, a total of 5,634 new single-family homes came onto the market in the Denver Metro area. Those properties didn’t last long on the market. September saw 5,973 sold homes, surpassing the number of new listings. This trend continued into October. With 6 percent more homes being sold than coming onto the market, available inventory continues to decline.
But the shrinking inventory isn’t lessening buyer demand. In the current market, sellers are seeing bidding wars, multiple offers well over the asking price, and properties selling in a matter of one or two days.
Historically Low Interest Rates Lend a Hand
One of the drivers of the hot Denver market are the current home mortgage interest rates. Sitting at historic lows since last summer, the rock-bottom rates have created a huge incentive for buyers. While home values continue to increase, the low interest rates help buyers overcome the increases by paying less interest on their loans. A one percent reduction in the buyer’s interest rate can give them thousands of dollars in additional purchasing power.
With the drop in interest rates, buyers are still able to complete for homes, while home prices continue to rise and hit all-time records. The median average of a single-family home in the Denver Metro area hit $500,000 in October 2020, a staggering 13.6% increase from the same time last year.
But condominiums and townhomes tell a different tale. The robust seller’s market have single family residences in a selling frenzy, but condominiums and townhomes aren’t seeing the same white-hot market. Although the available inventory has seen the same decline as single-family homes, buyer demand for these types of properties hasn’t been as strong.
Looking Ahead This Year
In the typical real estate season, sales slow in the Fall, leaving December through February the quiet months. But this year hasn’t been the typical year. With the interruption of the pandemic and business shutdown, the height of the buying season has pushed through the summer and continues as we head into November. The expectation is to see inventory levels continue to fall as they typically would entering the holiday season, but buyer demand will likely remain solid, pushing prices higher and maintaining a strong seller’s market.