If you’ve been following along with us here on the blog and in our monthly market updates, you are well-aware that Denver real estate has experienced unprecedented growth in the last year. Now, a month into the new year, it seems there is little chance of curbing or slowing that growth. There were a few important factors at play in the market last year and we, with the help of 5280, would like to tell you more about them. At Corken + Company, we believe understanding these factors and how they affect one another is the best way, as a homeowner or buyer, to make informed and adept decisions about your real estate future.
Low Supply
In a recent post, we stressed the benefits of selling in this extremely active market. Denver needs the inventory. From 2019, we saw a 2% decrease in active listings but a 7% increase in closed listings. Less homes were listed while even more homes than usual were sold, 63,000 to be specific. The gap between the two is expected to only continue to widen.
High Demand
This factor is essential and is really what heightens the effects of every other factor. Denver is an extremely desirable place to live. Our culture, lifestyle, and weather attract homebuyers far and wide. The pandemic has only intensified the many reasons people choose to live here. Not only does our fresh air and emphasis on outdoor adventure seem especially appealing as of late, but our booming and diverse economic opportunities make for quite the bonus. Increasing opportunities to work remotely make the move to Denver all the more viable for even more people.
And yet, the competition didn’t only come from abroad. Denverites themselves are making changes, and looking to “right-size” their home. With an increased dependence on the functionality of our homes, we have been more determined than ever to find that perfect fit.
Home Prices
Heavily tied to the relationship between supply and demand is home price. With lots of competition for buyers and very little for sellers, sellers are able to dictate much about their real estate transaction, including the price. Strategic pricing can lead to bidding wars, cash offers, and other concessions among buyers driven to “win” their dream home. Almost every month over the past year experienced a higher average sales price than years prior, however October in particular broke the all-time record.
According to the Denver Metro Association of Realtors, the average home price in Denver sat at $625,100 just after Halloween. Although it decreased slightly after that over the holidays, in December it still sat at $616,895 , which was $90,000 more than the average in December 2019. This phenomenon brings us to our next important factor.
Seasonal Trends
Like any other industry, real estate experiences highs and lows, every year, no matter the year, based on season. Of course, this year had its own very specific trajectory. January and February of last year seemed to be ramping up to what would be a very active Spring market. Spring and early Summer are typically the most active months in real estate. Instead, March came and brought with it initial shutdowns and heightened anxiety surrounding COVID-19.
While real estate has remained an essential service throughout the pandemic, there was a lull in the market while people decided to wait and see. Come May, and it seemed that waiting is all they really did. Listings were still down from the year prior but had increased by 56% from the month prior. By June, new listings were back to normal and then some. In effect, Summer became the new real estate Spring. COVID only delayed, rather than deterred activity. As we mentioned, the record-breaking only continued well into Fall and throughout the remainder of the year.
Interest Rates
Finally, it all seems to have hinged on interest rates. Historically low rates persisted throughout the year and continued to lure buyers into the market. They can afford more than they ever have, and that prospect is undeniably enticing.
With all of these factors enhancing and solidifying each other, Corken + Company is excited for the year of growth that lies ahead. We would love to sit down and find out how you can take advantage of the opportunities that abound in this active market. Let’s schedule a consultation. We offer real estate solutions without limits.
Spring is right around the corner and as we mentioned, it is typically the busiest time of the year for real estate. Stay a step ahead of the crowds by acting now.
