- Listen to the podcast “#258: Denver Real Estate Trends – December 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 December 2020 vs. December 2019
Here’s the initial look at the trends for December from the Denver Metro Association of REALTORS. It gives a few highlights if you’re wondering “how is the market?”
- Astonishingly low inventory.
- Inventory at 2500 active listings, lowest year-end level ever. And since Denver has the largest population ever, inventory per 1000 citizens is even worse. Inventory/citizen is really the metric that matters.
- Since 1985, the average year-end count is 13,000.
- At the moment, I expect the dysfunctionally low inventory levels to continue until 3Q, when they should start to build.
- Just looking at December 2020 vs. December 2019, inventory was down -49% (-61% from homes, -27% for condos).
- Historically, December 31st is the low point for inventory in most years; it should start to build in a few weeks.
- Just looking at December 2020 vs. December 2019, we added 2,040 new home listings in 2020 vs 1,740 in 2019.
- Condo new listing counts were up a little too.
MONTHS OF INVENTORY (MOI)
- 0.5 MOI! 4-6 MOI is a balanced market. It’s is the seller’s favor at every price point, which is very rare.
- As with inventory, don’t expect this to improve for the buyers until mid-year at the earliest.
- 63,000 closed deals, +7% from prior year. Given that we were off -50% in May and June, we were very busy June-December.
- For reference, in 1990 we closed 25,600. The population almost doubled (from 1.52 to 2.82 million) in that time.
- I think it’s possible we’ll sell fewer homes in the first half of 2021 than we did in 2020 due to lack of inventory.
- Just looking at December 2020 vs. Dec 2019, closed count was +5% (+2% homes, +11% condos).
- Overall average in 2020 was $525,000, +8% from 2019
- The Denver market has outperformed the overall US market; at some time we might expect we’d underperform for a few years. I don’t think 2021 will be that year, however.
- Expect very strong price gains in the first half of 2021, hopefully moderating a bit in the 2nd half.
- Keep in mind we sold lots of luxury homes in 2020, and it’s possible we’ll sell fewer than you’d historically expect in 2021. That might make the overall “average” reported price in 2021 softer. It’s possible we’ll have a few months (most likely in the 2nd half of 2021) where the “average” price in 2021 is lower than 2020.
- Just looking at December 2020 vs. December 2019, average price was +13% (+17% homes, +5% condos).
- Predicting rates is a fool’s game, so I’ll just echo the National Association of REALTORS chief economist – rates are expected to be 3.1% on average in 2021.
- I can tell you with 100% certainty that that forecast is wrong.
- We can assume in MOST scenarios that rates will be pretty affordable; it seems unlikely (barring some international crisis) that rates will spike in 2021.
DAYS ON MARKET
- Just looking at December 2020 vs. December 2019, marketing time fell from 42 to 20 days (condos) (!) and 42 to 31 for homes.
- Just looking at December 2020 vs. December 2019, we had 3,625 Under Contract in 2020 and 3,310 in 2019.
- Odds are sales unit count will be up a bit in January 2021 vs January 2020; it’s certain that prices will be up.
- Given the very strong showing traffic in December 2020, we’ll likely see good results in February unit counts, too.
The biggest unknown variables now are:
- How fast can we make the vaccine?
- How fast can we get both doses to the patients?
- How soon will the infection rates decline?
- How long until consumer confidence is restored and the feeling that it’s “safe to list my house” rebounds?
- How long until all of the people that didn’t list in 2020 DO list in 2021?
I’m sticking with my guess of mid-year for all of these items. When they happen, we should see a good uptick in new listings for the entry-level and mid-market. I can’t wait.
Another key concern is…can the real estate industry effectively educate consumers: “If I list my house in such a tight market, will I be homeless?”
Source: The above executive summary is from Lon Welsh of Your Castle Real Estate.
Denver Housing Trends December 2020
Showing per active listing trends for Denver
Excellent showing traffic for December!
Colorado Landlords Doing Better Than Most
77% of Colorado landlords reported collecting the full rent last month. This was much better than the 54% national average. It’s predicted evictions won’t be as widespread in Colorado as other areas of the country in the months to come due to this trend.
YouTube Video: Denver Real Estate Trends – December 2020
Colorado Springs Real Estate Market Stats
Check out the Colorado Springs Real Estate Trends – December 2020 blog post to find out how the Springs market compares to the Denver market.