May Market Update
As spring turns to summer, the real estate market in Denver continues to be competitive for buyers. This year, for the first time in 13 years, the inventory at the end of May was actually less than the beginning of May. Listings were down 6% over last month and 14% from last year. Buyers jumped on the inventory that was available in May, putting 6,719 homes under contract. We are seeing a significant amount of buyers that have either recently moved to Denver or are first-time home buyers. With such a significant amount of buyers looking only to buy and not sell a Denver home first, inventory remains slim.
The lack of inventory is contributing to price increases in all sectors of the market, including the attached product that buyers shied away from at the height of the pandemic. In May we saw 67.21% more attached homes close than in May 2019. The average price of both attached and detached properties was more than 22% higher this year than last year. With this figure it is important to note there is significantly more activity in the luxury market than last summer, this has a noticeable effect on the average price of sold properties.
It’s also difficult to discuss home prices increasing without recognizing that the Consumer Price Index jumped to 4.2%, significantly higher than expected and the highest in 13 years. Significant contributions to this were the costs of homes and construction materials. Consumers are seeing builders increasing their prices weekly as they try to factor in the rising cost of lumber and steel. The Fed has indicated that interest rates will remain the same until the CPI is closer to 2% for an extended period, the rate targeted by the central bank.
Those who are already invested in the Denver real estate market have seen dramatic appreciation. For those who are looking to jump into the market now, it is extremely competitive, but never impossible and few signs point to the pressure letting up in the immediate future. Eventually, buyer demand will normalize as interest rates climb, new construction opportunities will increase once supplies and labor costs normalize and home appreciation will soften as supply and demand balance.