March Market Update
As spring arrives, the market in Denver usually picks up. What does this mean for a year that never slowed down? Even more competition and not nearly enough inventory to keep up. The average days in the MLS for homes are down over 20% from just last month to a 19-day average. 4,889 homes closed in March, 24% more than in February. One thing to remember with this month’s statistics is that a comparison to March 2020 doesn’t give us a great picture of the market changes because of the dramatic pause the market took in March of last year.
While there was a small increase in the number of homes hitting the market in March, this increase was quickly eclipsed by an influx of buyers to the market. This has caused an increase of sold prices of 6.9% just over the last month. Another metric that highlights the competitiveness of the market, is the close-to-list price ratio. The average is now 103.32%. This means more often than not, homes are selling for a significant amount above the list price.
This brings us to the concepts of appraisals. As homes are closing at these inflated prices, appraisers are now able to use the homes and the prices at which they sold as comps for homes selling today. This means that even when sellers are preferring offers that offer an appraisal gap, the property is much more likely to appraise and buyers often don’t have to bridge the difference.
With prices going up, it is natural to be concerned about a housing bubble. What makes this fairly unlikely is just how many buyers are in the market. Even if rate increases discourage some buyers from making a purchase, there is such a disparity between the number of available homes and interested buyers, that there will still be a healthy demand.
One stat that really drove home the competitive market for us was if you waited just one month to buy a $500,000 property from the end of February to the end of March, you would have had to pay $35,000 more for that property. Home values in Denver are at historic highs so if you are ready to sell, now might be the right time as buyers still have access to great lending rates. If you are looking to buy, the numbers might be intimidating, but there are few signs that prices will decrease or inventory will suddenly increase. The greatest advantage a buyer or seller can have is an experienced and creative broker. The more you know about the market the easier it is to navigate.