Lately, qualified home buyers in the Denver area have been delaying buying a home. They continue to rent in hopes that home prices will drop and they can snap up a relative bargain. But the latest data shows that isn’t happening. In April, as the spring buying season gathered steam, the average price of a single-family home in the Denver area hit a record $487,974. That is a 10.32% increase from April 2016. Not long ago, we were talking about the average price of a single-family home hitting $400,000. Now, an average price of $500,000 is appearing on the horizon.
What is happening in the Denver area is simply supply and demand. There are only 5,361 active listings on the market. An area the size of Denver could handle an inventory four times the current level. On the bright side, if you are house hunting the number of unsold homes on the market is no longer at a record low. In April, the inventory of homes and condos grew by 8.94% from March and 2.68% from the previous year. But the Denver area clearly remains a seller’s market, with only a 5.7-week supply of unsold homes.
The months of inventory would be even lower, if not for a statistical quirk regarding the lowest priced homes. There is a 3.33-month supply of homes priced below $100,000. But there are only 10 of them on the market, with three homes selling in that price range last month. At the other end of the spectrum, there was a 6.87-month supply of homes priced over $1 million in April, a 7.3 percent drop from March. A 7 percent change in one month is huge.
It’s a sign that savvy buyers who can afford the most expensive homes, are voting with their pocketbooks. In the first four months of the year, buyers have purchased a record $6.36 billion in single family homes and condos. That’s $536 million more than what was bought during the same period last year. This year 15,554 single-family homes and condos have traded hands, almost a 7 percent increase from the first four months of last year. To put that into perspective, that is more than all the owner-occupied houses in Littleton!
The market is telling us two things. First, it is a great time to be selling your house, with double-digit appreciation still taking place. Second, if you wait to buy a home, hoping that prices will fall, you probably will be disappointed.