- Appreciation of Denver homes top nation.
- Home appreciation in Denver at 15.2%, Zillow reports.
- Nationwide home appreciation: 4.9% in April
While the Zillow report released on Tuesday ostensibly was about the national home shortage is driving up housing appreciation faster than expected, it also revealed that Denver topped the nation for housing appreciation in April.
Denver home prices rose 15.2 percent from April 2015, more than three times the national average of 4.9 percent, according to Zillow.
And the overall national appreciation was more than expected because of the nationwide housing shortage, according to the report. The report noted that in hot markets like “Dallas, Seattle and Denver,” home “inventory levels are down more than 20 percent and home value growth in the double-digits.”
The report also showed with a median average home price of $336,000, Denver was the most expensive housing market between the East and West coasts.
Yet, on a year-over-year basis, Denver fared better as far as inventory levels in most categories. Although the Denver area housing market showed a meager 0.1 percent increase in year-over-year inventory levels, it fared better than the 3.4 percent drop nationwide.
Denver also experienced a 2.3 percent drop in the bottom tier inventory, compared with a 7.8 percent drop across the nation, according to Zillow.
And Denver showed a 15.3 percent increase for the supply of middle tier homes. Only the Miami-Fort Lauderdale area showed a bigger percentage increase in that category, with a 16.8 percent jump, according to Zillow.
Denver’s 4.8 percent drop in top-tier inventory is the only category where Denver trailed the U.S. average. Nationally, the inventory increased 0.3 percent in the top tier, according to Zillow.
Denver also showed a 6.8 percent, year-over-year increase in condo inventory, if you believe Zillow.
That compared o a 0.6 percent nationwide drop.
Ryan Carter, like many other Realtors, is experiencing a huge shortage of homes on the market.
“On average, I would say I could sell a home six to 10 times over to extremely well-qualified buyers,” said Carter, of 8z Real Estate.
As an example, he recently listed a home for $400,000 in West Highland.
“We thought we were pushing the price a little bit, but the comps were out there to support it,” Carter said. “We ended up receiving 12 offers and every single one was above the listing price.”
The home ended up selling for $439,000.
Although good new for sellers, it is tough for buyers.
“The market continues to be driven by the inventory shortage,” Carter said. “The market is really tight.”
A year ago, when he was talking to the 8z brokers in his office, he said.
“Everything under $350,000 was just really crazy. This year, it is everything under $450,000 and maybe even $500,000,” Carter said.
“If the home is below $500,000, you really have to pur your battle gear on,” Carter said
“Rising prices driven by the low inventory have made the market extremely difficult for first-time buyers, he said.
“It’s hard to see the end in sight for that,” he said, as interest rates remain near historic lows.
“I think it is going to be the new normal, with low interest rates and if we continue. to see a strong and broadly diversified local economy,” he said.
“I do think we are going to see an attrition of some buyers, who are frustrated because they are facing so much competition in a market for homes showing double-digit appreciation,” he said..
One thing he has not experienced is homes being placed under contract not closing, even though according to a recent media report about one out of every five homes under contract is not closing.
“Personally, I have not had one home fall out this year,” Carter said. “And we’re not really experiencing that in our office, although i understand it is a dynamic happening in the market.”
If homes aren’t closing at a higher than normal rate, he thinks the listing broker is often to blame.
“Unfortunately, I frankly think a lot of people aren’t hiring the most professional brokers,” Carter said. “If buyers are vetted properly, deals very seldom do not close, especially in this market.”
Even if the initial deal doesn’t pan out, should sell to a back-up buyer, he noted Indeed, there may be a number of people waiting to pounce on a house that suddenly becomes available again.
“The problem is, a home can get a black eye, if the first deal doesn’t close,” Carter said.
Meanwhile, what Svenja Gudell, the chief economist for Zillow, said about the nationwide market, could easily capture what is happening in the Denver area.
“The struggle will continue for home shoppers this summer,” Gudell said.
Nationally, builders are only constructing about half the homes one would expect in a normal market, with demand far outstripping supply. she said.
“This summer’s selling season’s borders will most likely be blurred again as many buyers are left without homes and will need to keep searching,” according to Gudell.
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.