Inventory remains top of mind in sizzling housing market
What will homebuyers sacrifice just to get in on a piece of the action?
The Denver real estate market has recently become a hotbed of conflicting cause-and-effect discussion. Our condominium regulations (construction defects reform) have gained national attention, while our scorching home prices seem unstoppable to everyone except those who worked and survived the 2008 market. Instantaneous streams of offers and acute pressure on our infrastructure are all real concerns to the market overall, but perhaps the most important fact: a paralyzing lack of inventory.
The median sales price for a single-family home in the Denver metro area has risen consistently since July 2010 from $246,349 to $420,000, according to data provided by the Denver Metro Association of REALTORS®. During that same time, the average month’s supply – or the number of homes available in relation to demand – has entered a free-fall after more than a half-year’s-worth (6.6) to just over a month and a half (1.7). Buyers seven years ago could do something that today’s buyers couldn’t even imagine: they could ‘Think about it.’ They could analyze their needs and wants and make strong, educated decisions. They could carefully contemplate the life-altering shifts underfoot, and a home seller would need to wait until the ‘right one’ came along. Sellers couldn’t paint their basements orange or covert their den to a miniature railroad museum because they knew that appealing to the universal audience was crucial to hooking the proverbial ‘one.’
It’s no wonder prices have climbed as we enter the latter part of the decade; there are too few options available to the consumer. This conflict exists because we took too long to build what homebuyers wanted post-recession and today’s seller is apprehensive to reenter the marketplace.
Historical interest rates have taken a backseat to considerations of parking availability, bedroom count and proximity to activities. Considering the price of a home today is, lest we say, less important than its utility – a laissez-faire approach to cost appears to be shifting toward the cost of doing business.
The state of the market today is sound: Excellent for some, less so for others, but by and large good for the overall picture of a city’s health. According to the July 2017 Market Trends Report from the Colorado Association of REALTORS®, the ‘Days on Market Until Sale’ has increased year-over-year by 4.3 percent, indicating a potential simmer around the corner.
The Denver metropolitan area is one of the most attractive regions in the country. Residents want to own a piece of Denver so badly they will pay a heavy price for it. We have room, albeit more room than some would like to expand to, as demand grows. Gentrification in our core has not only occurred, but is now working its way through the suburban ring. Prices may continue swelling, inventory at a standstill, and demand showing no signs of a simmer, but we sure do offer a return on investment that even the best financial advisors seem to be banking on.