- Listen to the podcast “#247: Denver Real Estate MLS Market Stats – November 2020” on the Denver Real Estate Investing Podcast
- Watch the YouTube video (at the bottom.)
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
Key Takeaways from November ’20 vs. November ‘19
- Active Inventory Down 51% (homes -63%, condos -27%)
- Average inventory in November (1985-2019): 14,500.
- Current inventory November 2020: 3,415 (and the city is much bigger now than it was in the ‘80s!!)
- This is the lowest level of inventory in at least 40 years
- The huge decline in activity inventory this month vs. last year is the biggest monthly inventory drop ever.
- Number of closings up +12% (homes +9%, condos +19%!)
- Average price +13% (homes +15%, condos +8%)
- Median price +12%
- DOM -37%
- Under contract +16%
All of these are pretty consistent with what we have seen over the past few months. It’s amazing that we had this result in an election year, as that usually slows down the market. The showing trends in November continued to be very strong, so I’d expect us to have similar results in December and January.
Historically, we see the number of new listings brought to market in December is the lowest of the year, so there will be no relief on tight inventory until at least mid-January. If you have a client thinking of selling, this would be a particularly amazing time to list their home. Normally I’d suggest waiting until 1/15, but with tight inventory and huge demand, list now while there is less competition.
Multiple offers will likely be with us for at least 4-6 months.
What Could Slow the Denver Housing Market Down?
- All of this activity is enabled by record low mortgage rates. Historically rates go up 0.5% after a presidential election. I think there are other economic pressures that will conspire to drive mortgage rates up a total of 0.5 to 1.0% in the next year. That will eventually slow down the market somewhat.
- I doubt that many consumers are thinking of this, but the Gallagher amendment was overturned in the election. Residential property rates (around 20% of the cost of commercial rates for a similar value building!) will go up, and commercial property taxes will go down in the next assessment cycle. Don’t be surprised to see some residential property taxes go up 50%.
What Will Keep the Party Going?
- New construction is up but not nearly enough for our demand. Labor shortages (especially skilled craftspeople), scarcity of land and water, and very high copper and lumber prices make new builds not that economically attractive. We are very unlikely to overbuild and flood the market with inventory as we did in 2004-2007
- There’s no evidence that we’ll see many short sales or foreclosures from this recession (come to a trends class to see all of the evidence)
- Denver is continuing to experience population growth both organically (births – deaths) and transfers (moving in vs moving away). We continue to attract companies with high paying jobs.
- A huge number of Millennials are in their peak years to be first time buyers.
Prognosis for the Denver Property Market
- Very strong market for at least 4-6 months; not much change from last six months.
- Rates will eventually go up, slowing things down a little for 4-6 months while consumers acclimatize to higher rates. HOPEFULLY, the mortgage increases will be gradual.
- Most of us will be vaccinated by the middle of 2021.
- We’re selling a lot of big homes now and not many small homes; that will reverse sometime after most people are vaccinated and COVID is finally out of the headlines. The change in mix of what we sell could result in “average” price appreciation that looks a lot lower, perhaps even negative, for a few months in 2021.
- Economy will have largely recovered by mid-2022
- Denver’s real estate market will be pretty strong (not as insane as past six months) for 2022-2025 (or longer).
- Appreciation won’t be as high as it has been (6-10% annually), but real estate will still be a better investment than the stock market.
Most of the trends in the Denver market are being seen in most large US cities.
Source: The above executive summary is from Lon Welsh of Your Castle Real Estate.
Denver Housing Trends November 2020
Showing per active listing trends for Denver
Here are the latest showing trends for Denver. Great performance! Lots of buyer demand is still evident despite the election. No seasonal slowdown in sight yet.
Slightly lower than October but still record highs!
City Planners Propose Changes to Group Living Regulations in Denver
Denver city planners are no longer calling for halfway houses in low-density residential neighborhoods or as many as 10 unrelated adults in a single-family home. Their proposal still would allow halfway houses in more parts of town, even with a recently announced change that bars them from residential areas where only single-family and duplex homes can be built.
The advisory committee proposes increasing the number of adults who aren’t related who can legally share a single-family home from two to up to five unrelated adults, with up to 10 allowed in larger homes. Read more.
Colorado Ranks #2 on the State Technology and Science Index
- This index measures state-level knowledge economies, including their capability to support business formation, job creation, and wage growth.
- This is why so many high tech companies are moving their very highly compensated employees from NY and CA to CO!
- View the full report