Who’s excited for March Madness?! We were robbed last year of office pools, bracket betting, and what seemed like an inevitable Kansas Jayhawk national basketball championship. The Jayhawks are down this year, but one of our most cherished sports traditions is back, indicating that we’re inching ever closer to a return to the norm. It’s a great feeling.
Not to be left out of the madness, Denver’s real estate market continued its torrid pace through February, whittling inventory down to another record low of 2,024 homes for sale throughout the entire 11-county Metro Area. February marks the first time in history that we’ve seen inventory decrease in December, January, and February. For context, the average amount of active inventory on the market in February over the last 35 years is 13,531.
While inventory has continued to plummet, purchases continue to soar. February of 2021 saw 3,641 closed transactions, which represents a 4% increase in closings from February of 2020. Inventory is not the issue; sellers continue to list their homes for sale. Buyer demand is what is driving inventory down, and prices up. The median number of days that homes are sitting on the market is five. Sellers list on Thursday, host showings on Friday and Saturday, review multiple offers on Sunday, and are under contract on Monday. Buyer competition is fierce. In February, I wrote two offers that were over $100,000 above the listed price, and neither were accepted. As a result, the average final purchase price of detached homes is up to $632,000, the average purchase price of attached homes is slightly above $400,000, which represent a 23% and 16% increase in home prices respectively.
What will it take for this market to return to its norms? Simply put, more inventory. There are two factors we’re focusing on right now, which we hope will lead to more inventory for buyers to choose from:
1. Last week, interest rates saw a quick bump of .25%. This bump was felt immediately in our market; that quarter-point was enough to take some buying power away from home shoppers, and knock their price points down a touch. Should rates continue to tick up, it will slow down the buyer pool.
2. As the COVID vaccine makes its way to more and more people, we wouldn’t be surprised to see more sellers put their homes up for sale.
Seasonally, we see inventory start to increase in March. Time will tell if our typical seasonal trends hold true in 2021. Until then, buyers must continue to be diligent, resilient, creative, and most importantly FAST, in getting their offers in front of sellers. Speed wins in the real estate version of March Madness. Sellers, we need your inventory. If you’re curious about what your home is worth in this market, please reach out. We’re happy to help.
As always, please get in touch with us if you’d like to dive deeper into our market and how to best navigate it. We’re always here to help! In the meantime, continue to stay healthy, safe, and as sane as possible. Have a great March!