I very much appreciate the ReColorado January statistics report. Gives a great overview of what’s going on in the Denver metro area using the latest multiple listing service data. There are, btw, two MLS platforms in the Denver metro area. Since the 4th quarter of 2020, they are sharing data.
This post is based upon that data and sharing it with you.
Closed Denver Metropolitan Single Family Residences Slide
My immediate take-away is 2020 is an outlier in the graph above. Remove that month’s year-over-year data and the number of single family residence closings has been steadily decreasing for five years now.
Regardless, you can see closings have plummeted from last year in general. Spoiler alert: the reduced closings are a reflection of lack of inventory.
Heard around the virtual water cooler while discussing ReColorado January statistics with fellow Realtors. “Remember last year when we were scrambling to find toilet paper? Finding homes for clients is like that now.”
No surprise pending transactions are up. On the List side, my Lafayette listing at 708 Brome Place flew off the market in January with multiple better than full price offers. On the buy side, have been showing homes in Arvada and Genesse in dramatically different price points and running into the same situation. Lack of inventory is plaguing the Colorado Front Range.
Home Prices Leap
Regardless of whether you wanted an attached dwelling or a house, prices leapt upwards according to the latest ReColorado January statistics data.
Let’s talk about year over year. That saw home prices climb sixteen percent. It’s important to mention there is a data share occurring between Ires and ReColorado – and this could be impacting the percentages.
Regardless though, the month to month data is compelling. A normal real estate market sees 3 1/2 percent annual growth per year. We’ve been far from normal for ages now. But. But, look at December 2020 (which was a hot month) to January 2021. Two percent value increase in just thirty days? This bodes for a very robust marketplace.
ReColorado January Statistics Reveals Fastest Markets
Home Buyers Don’t Need To Hear This
If you are a home owner, and are contemplating the sale of your property, this is the proverbial market you’ve been waiting for. Several forces have combined to make this one of the single best times, ever, to sell your house. Or condo. Or make a change with an investment property. Why?
Homes Are Selling Fast
Six days to contract is very misleading for home buyers entering the marketplace. That six days is more like one. Consider this: house is listed on a Wednesday, say at 2 pm. Some agents spot it right away and start setting showings – even for the same day. By Saturday, there are a pile of offers and have easily been thirty or forty showings. Sunday the listing agent requests, “highest and best by noon, with a Monday acceptance deadline.” Monday the house is showing as under contract in the MLS. That’s six days.
Three Factors Really Driving Market
- The Pandemic. Yes, it sucks. I’m personally climbing the walls to hang out with friends. Silver lining, the pandemic is driving the housing market. My two cents? When we suddenly can travel and play and interact, and get out of the house – this urgency for space might cool.
- Interest rates. Saw a great real estate cartoon the other day that sums it up nicely. In the cartoon, a couple in the 1980’s is ready for their first home and decides that interest rates in the 8 percent range are low enough to go for it. Side by side is a couple from today. They are wondering if 2.75% is good enough to act. Folks, home mortgage rates are honest to god crazy low by every historical measure.
- Limited inventory of homes at practically every price point – except maybe luxury. Owners in big houses wanting more – hard to trade up. Families with a newborn and needing another bedroom? Lack of inventory makes it difficult to trade up.
These factors are not going to persist forever. And home owners thinking about selling should take advantage of the moment while it is here. There was a similar moment, under completely different circumstances during The Great Recession. If you can believe it, at one point there was a completely forgivable credit of $6,000 for buying a house. It was set to expire. It got people able to take advantage of that credit off the fence and sales jumped. But, there were a number of home buyers that didn’t qualify for the credit that acted as well, caught up in the euphoria of the moment. A decade later, with home values skyrocketing since – they look pretty brilliant. But in the moment, it was all the rush of the moment.
This moment is not going to last. For owners seeking truly the highest and best prices ever for their homes, this is the moment to take advantage of. The 2021 ReColorado January statistics release makes the case compellingly so.
The Real Estate Absorption Rate
86,528 x 6.1893 divided by 4/10ths of Pi plus 2.
No, that’s not it. The absorption rate is dividing inventory sold by total inventory in a given time frame. Four to six months inventory is a balanced market. We have three weeks supply.
Final Thoughts From Realtor Bob Gordon
We are in a years long Seller’s Market. This isn’t going to last forever, but it is clearly not ending today. In fact, the data suggests its becoming a stronger market month over month.
Interest rates remain incredibly low. Not just for housing. President Biden talks about a big stimulus injection into the country to get to full employment in summer 2022. This is based in part on the low cost of money. Borrowing is historically cheap. That’s not going to last. Inflation could also be in our nation’s future; real estate is a good hedge against inflation.
You could say it has gotten more expensive to live here. I have have lived here a long time. Seems like the secret is out: Colorado is a great place to live.
I’ve been loving living in Colorado since I moved here in 1991. Yikes – three decades ago this year. We have a great place to call home. I moved here for the winters and stayed for the summers!
Few natural disasters (though fire is a big concern), relatively good weather (as I write in a crazy cold streak), with 300 days of sunshine. Weed is legal, there is a crazy popular craft beer thing going on. An accepting community is well reflected by an openly gay governor leading the state of Colorado. This is a great place to live. With natural beauty and the mountains in our backyard.
And maybe home prices are just catching up with what Locals have known for a long time. The Colorado Front Range is a great place to call home.
Shameless plug: give me a call to help with your perfect home along the Front Range.