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 has 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 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.”
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 question if 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 through 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 but encourage an increase in inflation. Ultimately this could push home loan rates higher.