The two overriding forces shaping this summer’s Denver-area housing market are fewer homes on the market and the highest prices ever seen. There were fewer than 5,500 total homes on the market at the end of May, reports the Denver Metro Association of Realtors. Typically, you would have three times that many homes for sale as the summer market is about to kick off.
The low supply of homes has driven home prices to record levels. For the first time, the average price of all homes sold in the Denver area has topped $400,00, according to REcolorado, the biggest MLS in Colorado. REcolorado puts the average sold home price at $407,662, 9 percent higher than it was a year ago. Given how expensive homes are, some consumers will be priced out of the market, meaning there may be fewer people competing for homes this summer than last summer.
Still, the low supply of homes has also driven down the months of inventory on the market. The entire Denver area housing market only has slightly more than a 5-week supply of unsold homes on the market, according to DMAR. In other words, if no other homes were added to the market and the sales pace remained the same, in less than six weeks all of the inventory would be gone!
As tight as the market is, the lack of inventory is especially severe at the lower and middle end. For homes priced from $100,000 to $399,999, there is less than a four-week supply of unsold homes on the market.
If you move up one price strata to $400,000 – $500,000, it doesn’t get much better with only a 4.2-week supply of unsold resale home for people to buy. And if you are looking for a home priced between $200,000 to $299,999, good luck. There is only a 1.5-week supply available in that price range, where there are far more buyers than homes for sale.
A normal market, where supply and demand are in balance, has about a 5- to 7-month supply of homes. Even for homes in the Denver area priced at $1 million and up, there is only a 7.5-month supply of homes.
If you want to buy a home this summer, speak with a trusted real estate broker to map out a strategy. And if you want to sell, congratulations! Price your home right and your biggest problem will be picking a winner.