Spring comes early to Denver housing market.
Spring market began in February of 2016.
Millennials help drive the market.
The market stats for February confirm what practitioners like myself have felt “on the streets”: the market has been more active than usual this winter and the spring market is coming early. Buyers are out in force and competing for the limited inventory available. The lack of listings, especially at lower price ranges, continues to challenge the market.
However, steep gains in prices are driving up the overall volume of real estate sold.
Sales volume across all Front Range markets in February increased 3.6% percent compared to February 2015. The inventory of homes for sale remained scarce, dropping to 1.9 months of supply as the sellers’ market rolls on. Last year at this time, inventory was 2.3 months, a sign that the market may be even more frenzied this spring.
In the Denver proper market, sales volume decreased 1.3% on a year-over-year basis in February. The supply of available homes in the Denver market fell to 1.3 months.
Of course, market stats are more than just data points.
Every closed transaction involves people – buyers who purchase and move in and owners who sell. This month we take a closer look at a theme that is becoming more common in the marketplace: Millennial buyers trading places with Baby Boomer sellers.
Much has been written about the Millennials (those 35 years of age and younger) and their wish to move to the urban core in pursuit of walkability, amenities, and a hipster lifestyle. What has received less attention is that a growing number of Millennials are moving to the ‘burbs.
In fact, a recent survey of 95,000 home buyers conducted by the National Association of Realtors found that just 17 percent of Millennials bought homes in urban or central city areas. That urban share came down from 21 percent in the previous year’s survey. It’s important to note that Millennials make up the largest group of home buyers. Slightly more than 1 out of 3 of today’s home buyers are Millennials.
Clearly, Millennials have a strong desire for home ownership, and many would like to own in central urban areas.
However, the low supply of homes for sale in urban areas is thwarting this desire, particularly at the low-end where Millennials are likely to be buying. The result is that Millennial buyers are pushing their home searches further out into the suburbs looking for more space at an affordable price.
When Millennials purchase homes in the suburbs, more often than not they are buying from Baby Boomers. So where are these Boomers going? Somewhat paradoxically, they are increasingly moving to the urban core, sometimes as purchasers, but increasingly as high-end renters.
At the National Multifamily Housing Conference, one trend that was highlighted was the surprising surge in older renters, many of whom sold their home and chose to rent a luxury apartment walkable to retail and entertainment. A Boomer’s rental property may be less of a home and more of a home base from which they launch their active lifestyle of recreation and travel.
With the multi-year increase in home values that we have experienced, many Boomers are realizing that they have enough equity in their home to fund their active retirement lifestyle, but only if they sell. Which brings us full circle back to our inventory shortage.
At what point will enough Boomers decide to sell to satisfy the growing demand of Millennials?
That remains unclear.
However, if you are a Baby Boomer, a Millennial, or a Gen Xer, perhaps I can play the role of “intergenerational matchmaker” and connect you with a buyer or seller of another generation.
As an active Realtor in this market, I love the challenge of bringing together buyers and sellers and helping members of every generation achieve their real estate goals and lifestyle dreams.
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. DenverRealEstateWatch.com is sponsored by 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.