Denver needs more homes to sell

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Highlights:

  • DMAR releases November report.
  • Report shows home inventory at record low.
  • Market could use 3 times as many houses.
DMAR chart illustrates the need for more homes to sell in the Denver area.

DMAR chart illustrates the need for more homes to sell in the Denver area.

Denver needs more homes to sell.

There were a record low 5,420 single-family homes and condos on the Denver-area, 11-county market at the end of November, according to an in-depth analysis of Metrolist data by the Denver Metro Association of Realtors.

“We are at an all-time low; this is the lowest we have ever been,” said Greg Geller, chairman of DMAR. Inventory levels in the metro area have been low for the past 24 months and the situation keeps getting worse, he said.

“We have far more buyers than sellers,” said Geller, owner of owner of Vision Denver Real Estate.

Denver supply and demand out of whack

He said the market could handle two or three times its current level of listings.

Source: DMAR

Source: DMAR

In July 2006, inventory levels peaks with 31,989 homes not he market, according to Metrolist. Last week, Metrolist, which uses a different methodology than DMAR, tallied an inventory of 6,566 homes on the market, also a record low. The previous low, according to Metrolist, was in March 2013, when it stood at 6,682.

Geller said if the Denver-area were in balance between buyers and sellers there would be about 15,000 homes on the market, so anything above that would mean a buyer’s market as sellers had to compete on prices and values dropped. Anything above 15,000 would be a seller’s market, in which listings command a premium price. Last spring and summer, for example, bidding wars in the Denver area were common. It wasn’t that long ago, that a prospective home buyer “would not have dreamed of offering more than the list price,” but the practice became routine during the past two years, he said.

“I think a good number would be 11,000 homes, or double where we are today,” Geller said

The lack of inventory and continued interest from buyers, is classic supply and demand, and is driving up home prices, Geller said.

“I am worried we are going to be selling into a bubble,” Geller said. “We can’t sustain have home prices rising 10 percent or 12 percent a year,” he said.

Denver-area home prices have been on a tear, when compared with November 2013, DMAR’s analysis of Metrolist data shows:

  • At the end of November, the median sale price of single family homes and condominiums was $280,954, up 12.4 percent from $250,000 in November 2013;
  • The average sold price of all homes was $330,544 up 8.95 percent from $303,378; The average sales price was $364,770, 9.6 percent greater than the $332,752.
  • And the median price of a single-family home was $313,00, a 15.4 percent increase from $271,200 in November 2013.

Denver condo prices up 18%

Condominium prices are rising even faster. The median sale price of a condo at the end of last month was $192,500, 16.7 percent higher than the $164,950 a year earlier. The average price of a condo sold rose by 18.2 percent to $240,672 from $203,639.

The number of active listings is down 42 percent from the 9,352 in November 2016 and down 19.7 percent from the 6,748 in October to DMAR.

Denver-area condo shortage

That equates to only a 1.7 month supply of single-family homes and a one-month supply of condos, according to DMAR.

Source: DMAR

Source: DMAR

“One of the reasons we don’t have enough inventory is because builders aren’t building condos because of the terrible construction defect laws that make it so easy for HOAs to sue condo developers,” Geller said.

Anthony Rael, chairman of the DMAR Market Trends Committee, described the low inventory as a “severe shortage.”

Nicole Rufener, who serves on the DMAR board, said the lack of inventory is the biggest challenge facing the Denver-area market.

Denver housing prices. Source: DMAR

Denver housing prices. Source: DMAR

Denver Realtors talking about lack of home supply

“That is the thing we have al been talking about,” said Rufener, a broker with Live Urban Real Estate. She agreed with Geller that the market can handle far more homes. “I think we could handle double or triple the homes we have on the market today,” she said.

She said it is “especially tricky for move-up buyers. They fear that if they sell their home too quickly, they will have no place to move to.

The market also is heading into another record as the year winds down. In the first 11 months of the year, buyers have snapped up $16 billion in homes, a 16.5 percent jump from the $15.3 billion in the first 11 months of 2013. “This has been a good year for Realtors,” Geller said. “No one is complaining. We Realtors have just had to adjust to the low inventory and learn to deal with it.”

Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee Co. and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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