- New home listings far exceed housing supply.
- Active listings could triple or quadruple to meet demand.
- Last month was the lowest April ever in terms of active listings.
An average of 235 new listings of homes and condos came on the Denver market each day last month.
The 7,059 new listings that hit the market in April were 40 percent higher than the 5,025 inventory of unsold homes on the market last month, according to a report released last week by the Denver Metro Association of Realtors.
Last month, had the fewest number of active listings for any April on record.
“It’s unprecedented,” to have so many more homes come on the market than the number of active listings, said Peter Niederman, CEO of Kentwood Real Estate.
Indeed, the number of new listings was never considered an important metric to track, so a precise ratio between new listings and the inventory is difficult to pinpoint.
Ten years ago, there was an inventory of 24,164 homes on the market.
That would have meant that 33,858 homes came on the market in April 2005.
“That didn’t happen,” said veteran Realtor Gary Bauer.
It’s more likely that perhaps 4,000 to 6,000 homes came on the market in the mid-2000s, when the monthly inventory was hovering in the 20,000 to 30,000 range.
“Historically, we really didn’t track the number of new listings,” said Bauer, an independent broker.
“It wasn’t important,” he said. “This is now just part of our crazy market. It is the new normal.”
Many consumers, and maybe even many real estate agents, might be surprised how many new homes are coming on the market each month, especially relative to the inventory, Niederman said.
“A lot of new homes are coming on the market, but they are being masked by the number of people transacting real estate,” Niederman said.
“As I have said before, the sales velocity it outpacing the number of homes on the market,” Niederman said.
“That is driving up the price,” Niederman added.
Last month was the first time ever that the average price of a sold home topped $4000,000.
The average price of single-family home closed in April was $404,206, 11.6 percent higher than $362,368 in April 2014.
Anthony Rael, a broker with RE/MAX Alliance, from time to time checks the number of homes being listed for sale.
“I knew that on some days, several hundred homes might come on the market,” said Rael, who also is the chairman of the chairman of the DMAR Market Trends Committee.
“But when I saw 7,000 new listings at the end of April, I was pleasantly surprised,” Rael said.
However, it is not enough, by along shot, to meet the demand for homes driven by Denver’s strong economy and low interest rates, he said.
The appetite for homes is so strong that some Realtors have reported their clients have offered more than $50,000 above the asking price and have still lost a bidding war.
“The real frenzy is for homes priced $350,000 or below, but it is important to say there is a shortage across the board in just about every price range,” Rael said.
Rael said that the market needs more listings.
“I honestly believe that if we had twice as many listings, we would have twice as many under contracts and twice as many closings,” Rael said.
In face, based on historical numbers, he said the market could likely absorb three or four times as many listings than today’s inventory level.
“If we had 15,000 or 20,000 listings, instead of 5,000, our market would be much more in balance between buyers and sellers,” Rael said.
Still, he does not see a bubble forming.
“Generally, I would say no,” Rael said. “I don’t see a bubble forming on the immediate horizon.”
However, it takes six to nine months to tell if people were overpaying, he said.
And a lot could happen to change the dynamics of the market.
“If interest rates were to rise and the supply would grow, it would cool price appreciation. By how much, it is hard to say,” Rael said.
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.