Last year, Realtors sold a record $25 billion in Denver-area homes. Lets put that into perspective. Twenty-five billion dollars is more than the GDP of Iceland. Sales of homes, town-homes and condos toppled the previous record of $22.4 billion set in 2016 by almost 12%, according to a recently released report by the Denver Metro Association of Realtors. Last year marked the fifth consecutive year of record sales volume, as home prices soared to never seen before heights.
Looking back, sales volume in 2017 was 52.4% higher than in 2013. A total of 57,788 homes closed last year, which is slightly more than the combined population of Littleton and Greenwood Village. It’s also a 2.93% bump from the number of homes that traded hands in 2016. Home prices continued to rise, but not at the double-digit year-over-year increased booked in 2016 from 2015, and 2015 from 2014. Last year, the average price of all homes sold was $434,097, an 8.78% increase from 2016. The average price of a single-family home sold was $480,140, just under an 8.7% increase from 2016.
Prices rose because demand continued to out-strip the supply. The year ended with a mere 3,854 unsold homes on the market, a 9.64% drop compared to the end of 2016. Make no mistake, there are very few homes available in Denver’s seller’s market. There was only a one month inventory of homes on the market at the end of December, a 7.3% drop in supply from a year earlier. For homes priced from $200,000 to just under $500,000, you need to measure the inventory in weeks, not months. For homes priced from $300,000 to $399,999, for example, there was only 1.3 weeks of inventory for buyers to choose from.
The only price strata that arguably is in equilibrium between buyers and sellers is for homes priced at $1 million or more. In that price range, there is 5.88 months of inventory, which marks almost a 23% drop in the supply of luxury homes from December 2016.
Will the trend of ever-increasing sales volume continue in 2017? It’s hard to say. Certainly, with tax law changes that will eliminate or reduce the benefits of the mortgage deduction, the housing market is in uncharted waters.