As 2019 is now in the rearview mirror, it’s time to look back and see how the real estate year turned out. While years past have been characterized by historically low housing inventory and significant home value increases, 2019 shaped up differently. While we are still in what is considered a Seller’s Market, that housing crunch has eased and buyers have had more homes to choose from and more negotiating power than we have recently seen.
These changing dynamics, along with other economic and political factors (like stock market hiccups, the inverted yield curve, trade wars, and impeachment) have created some uncertainty in the real estate market with buyers and sellers worried about a looming economic recession. So what does our market look like now? What should buyers and sellers know going into 2020?
We just finished compiling the most recent numbers for Boulder County and the Denver Metro.
See below for market stats and analysis.
Median Sold Price
The statistic on top of most buyers and sellers minds is the Median Sold Price. The Median Sold Price statistic shows whether home values in an area are increasing or decreasing as compared to previous years.
Median Sold Price- Boulder County Cities
Median Sales Price in Boulder (when considering both attached and detached homes) is up 5% year-over-year. This metric shows us that while sales price increases have slowed from the extremes of 2015 and 2016, the city is still experiencing an appreciating market.
The other three Boulder County Cities, Louisville, Lafayette and Longmont have cooled off. Home values for these three areas essentially leveled out in 2019 with appreciation for Louisville, Lafayette, and Longmont at -0.2%, -0.5%, and 1.2% respectively.
For all three of these areas, we are likely seeing the effects of wage earning growth being slower than home appreciation growth over the past few years. Although each area continues to see wage earning growth, they haven’t matched the 10%+ levels of appreciation that these cities have seen over the same period of time. After such strong appreciation over the last few years, it isn’t a surprise, and it’s probably healthy, that things have cooled off a bit.
Median Sold Price- Denver, Arvada, Westminster, and Broomfield
The Denver metro real estate market continues to be driven by its popularity with millennials and young folks, the tech sector, the strong business and start-up culture, the oil and gas industry, and the somewhat more affordable neighborhoods that are interspersed throughout the city.
Median Sold Price in Denver is now at $430,000, up 1.2% to this same time last year. This number is quite variable throughout the city, with the most attractive neighborhoods seeing higher appreciation, and less attractive neighborhoods with fewer amenities lagging behind.
You can see this play out clearly on the western side of the city. We have many clients who have purchased homes in the Highlands, Sloan’s Lake, and Berkeley areas, and those neighborhoods are outperforming Denver as a whole. These areas are seeing between 2% and 4% of median sales price appreciation year-over-year, as opposed to the 1.2% that is the median sales price appreciation of the city as a whole.
The other communities on the outskirts of Denver, like Arvada, Westminster, and Broomfield, offer families a good amount of bang for their buck while still keeping the commute to Denver a reasonable 30 minutes or less. As such, they have continued to benefit from the jobs and general attractiveness of the Denver lifestyle. We are seeing these communities performing very well year-over-year with Median Sales Price in Arvada up to $429,000 (up 3.4%), Westminster up to $378,000 (up 3.6%), and Broomfield up to $475,000 (up 6.7%).
Median Days on Market
The Days on Market metric shows us how many days it is currently taking for homes to get from the first day of their listing to the closing table.
We have two local Multiple Listing Services in this area and they show Median Days on Market differently on their platforms. The Northern Colorado Multiple Listing Service (IRES) shows Median Days on Market calculated as the total amount of time a home is listed (from day 1 to the closing day). The Denver Metro Multiple Listing Service (Matrix) shows Median Days on Market calculated as the total amount of time a home is listed before accepting a contact, so we have to take this into account when we are considering this data.
Let’s look at the northern Colorado data first.
Median Days on Market- Boulder County
As you can see from the graph above, the Median Days on Market have increased year-over-year in Boulder County, meaning homes are being shown longer before going under contract with a buyer. The average number of days a home spends on the market in Boulder is now at 50 days, meaning from the list date to the closing date we see an average of 50 days of total list time. This number is up (16%) compared to last year.
If Median Days on Market for a specified area is 50, that means a home is most likely for sale and being shown for about 20 days, and then the seller of that home is accepting a offer from a buyer, with the Under Contract period being about 30 days so a buyer can do their due diligence and close on their loan.
The Days on Market in Longmont is now at 46 days, up 12% from last year. The Median Days on Market in Louisville is at 43 days (up 13%) and Lafayette still leads the pack as it has for the past few years with only 42 days on market. The average home in Lafayette can expect to receive an offer in about 12 days.
Now, let’s look at the data from the Denver metro.
Median Days on Market- Denver, Arvada, Westminster, and Broomfield
This graph is showing us the Median Days on Market, calculated from the day of listing to the day a seller accepts a contract. You can see that the Days on Market for the Northwest Denver area is slightly faster than in Boulder County. While a seller in City of Boulder may expect to show their home for about 3 weeks before accepting a contract, sellers in Arvada, Westminster, and Denver could reasonably expect their homes to receive an offer more quickly- in 11, 10, and 13 days respectively.
Months Supply of Inventory
Another metric Realtors use to evaluate market conditions is the “Absorption Rate”. This number is the months of supply of listings currently on the market. It lets us compare how many listings we have to how many buyers are in the market. An Absorption Rate of 6 months means that if no new listings were to come on the market, all current and active listings would be sold within 6 months. This is what we consider to be a balanced market. An Absorption Rate of below 6 months indicates a Seller’s Market.
Months Supply of Inventory- Boulder County
Most of the cities of Boulder County have seen increased inventory levels over the past year, with the exception of Louisville which actually has a bit lower inventory than this time last year. Since all of the inventory levels are still well below balanced market levels of around six months (and this shows us buyer demand remains high), it is likely that these areas are capable of seeing home value growth in the coming year, should we not see an economic recession during that time. If an economic downturn is around the corner, low levels of inventory should help insulate these areas from seeing significant decreases in home values.
Months Supply of Inventory- Denver, Arvada, Westminster, and Broomfield
The four cities of the Northwester Denver area have also shown increasing inventory levels. They follow suit with the inventory level increases that the Boulder County cities have experienced. While months supply of inventory has increased across the board, the months supply of inventory in the Northwest Denver area still indicates a Seller’s Market. The best homes in the best condition should see strong buyer demand and could receive multiple offers and offers over the list price. This is in line with our recent experience with buyers in these markets.
So what do all of these numbers tell us about our market in 2019? And what should Buyers and Sellers know as we make our way into 2020?
What we can take from these numbers is that 2019 was a year in which the market changed. Inventory levels increased in both the Boulder Country and Denver Metro markets by 16%. Although we did see some increases in the number of homes sold (3% in Boulder County and 6% in the Denver Metro), it wasn’t enough to offset the inventory increases from having effects on both markets.
While inventory levels increased, Months of Inventory, a measure of how many buyers are buying vs. how many sellers are selling, has remained below 3 months in both areas. That means both areas are still in Seller’s Markets. That coupled with continued short Days on Market for active listings show that buyer demand is still generally strong across most communities.
As for 2020, buyers should be prepared for continued competition for the best homes in the best neighborhoods and will need to act quickly if they would like to secure those homes.
It is likely we will continue to see some opportunities for buyers to negotiate down list prices this year. Buyers who want to take advantage of this should look for homes that have been listed for a while, homes that have fallen out of contract, and homes that are fixer-uppers. As always, buyers should proceed with caution and make sure to identify homes that will retain their value well based on things like location, condition and nearby amenities.
Generally speaking we should anticipate slower appreciation than in years past. However, we don’t see signs that buyers should expect a big drop in home values. Our local job market and buyer demand both remain strong so it seems it is most likely that current home values will be sustained for the near future. National election years can tend to be sluggish in the fall-time so we will see how that plays out as we near the presidential election.
Sellers should know that while they still hold some advantages in the market, especially in the most desirable areas, proper pricing of their homes at the time of listing and a robust marketing plan should help their homes shine in comparison to their competition. The days of every listing selling in the first weekend for over the asking price seem to be behind us for now as sellers have more competition this year than in years past.
As always, if you have more questions, don’t hesitate to reach out! Until next time!
Allison and Ken