May in the Denver market brought an increase of average days on market, a slight dip in average closed price, and a jump of almost 14% in inventory. While these are all signs of the market moving toward becoming more balanced, the competitive Denver market still has a long way to go. In May, we saw 448 more properties hit the market than in April and watched closed home numbers tick up 3.75% from April. As additional inventory was added, it was just as quickly gobbled up by Denver buyers.
Average home prices in May finally took a downward trend, but after a year-to-date appreciation of over 18%, a 1% decrease isn’t the relief that timid buyers had in mind. This spring and early summer, seasonal demand, and low inventory drove up appreciation. With the average close price for homes at $714,495, even with this small adjustment, Denver is paced to set appreciation records in 2022.
The increased inventory is giving buyers a few more options, as well as valuable time to think over their decisions. Many buyers made the decision early this year to stay on the sidelines of the market, while conditions were especially competitive and this might be their time to dive back in. It’s hard to accurately describe the advantages sellers had this spring, appraisal gaps and inspection waivers were commonplace. As we roll into the thick of summer, this increased inventory means sellers are still in the driver’s seat, but may not see quite so many perks. Just because there is more inventory, it doesn’t mean it is discounted inventory.
The average close-to-list ratio is still well above 100% at 105.33%, but homes that might have a tricky layout or backup to a busy street are sitting longer on the market. 8.3% of closed transactions in May made a price reduction before going under contract. This compares to 6.9% in May of last year. The days of any and everything, hitting the MLS and immediately flying off the market, may be numbered.
The summer selling season started early in 2022 and may only be taking a quick breath before heating up again before school starts. Inventory is the most critical piece when it comes to a balanced market. We expect inventory to continue to rise as mortgage rates settle around 5% and inflation continues. However, the buyer pool in Denver is strong and we are a long way off from having enough inventory to go around.