Real estate has been quite a ride this year. From a sluggish winter, we dove right into one of the hottest markets on record. So where do things stand now?
We just finished compiling the most recent numbers for Boulder County and the Denver Metro. Read on below for an in-depth analysis of market conditions.
Median Sold Price
The statistic on top of most buyer’s and seller’s 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.
There has been a lot of news around this topic, and what is true for many areas of the country is also true here. We have seen hefty median sales price increases in the last 12 months.
Median Sold Price- Boulder County- Single Family Homes
The above chart represents the Median Sales Price in the Single Family Home Market. The gains shown here represent year-over-year gains.
Median Sales Price in Boulder is up 22% year-over-year. Louisville is up 26%, Lafayette is up 42% (probably more of a statistical anomaly as that number is not in line with the other parts of Boulder County – we believe the actual numbers for Lafayette are closer to 20% – 25%), and Longmont is up 22%.
Median Sold Price- Boulder County- Attached Dwellings
As far as attached homes go, gains are still strong, however, they are different than what we are seeing in the single family home market. Condos and townhomes in Boulder are up 9% year-over-year, Lafayette is up 30% (largely due to a new high-end townhome development that is selling at above average prices for Lafayette), Louisville is up 15% and Longmont is up 13%.
Denver Metro real estate follows the same trends we have been seeing in Boulder County.
Median Sold Price- Denver, Arvada, Westminster, and Broomfield- Single Family Homes
Median Sold Price in Denver for single family homes is now at $635,000, up 27% compared to this same time last year. The western suburbs of Denver also continue to appreciate at a fast clip. Median Sales Price in Broomfield is $642,000- up 20%, Arvada is now at $596,000- up 22%, and Westminster is at $535,000- up 27%.
Median Sold Price- Denver, Arvada, Westminster and Broomfield- Attached Dwellings
Median sold prices in attached dwellings for the Denver Metro have also seen strong gains, but, like in Boulder County, not at the same rate that single family homes have. Denver attached homes now sell for a median sales price of $432,000- up 8%, Broomfield is now at $442,0000-up 18%, Arvada is at $386,000- up 16% and Westminster is now at $345,000- up 20%.
These strong gains elicit questions and trepidation from some buyers. Buyers want to know whether the housing market will remain hot, whether or not prices are expected to go down, and if we are in a bubble.
While we don’t have a crystal ball and we can’t be sure of the market forces that will play out over the next couple of months and years, what we do know is that the housing market conditions are very different than they were in 2008 prior to the last down turn.
In fact, the New York Times featured an op-ed this week about the current housing boom. The author drew a distinction between the home buyers of today and the buyers and market conditions prior to the last housing recession.
The author says: “In fact, home buyers today are financially sound, with 73 percent of mortgages in the first quarter of this year going to those with a credit score of at least 760, up from 64 percent last year. Beyond good credit scores, buyers today have healthy debt-to-income ratios and wealth thanks to some combination of savings, home equity, investments and generational transfer.”
In addition to that, we don’t have the prevalence of adjustable rate mortgages, balloon mortgages, and under qualified buyers like we did before the Great Recession. That isn’t to say we could not see a downturn of some kind, but just that if we do, the forces at play will be different. Only time will tell how market forces will shape our future market. We think it is reasonable to expect a slow down or stagnation in the upcoming months to two years. However, we are still seeing strong buyer activity and multiple offers for the best homes and more buyers than sellers in the market. As long as this low supply, high demand dynamic continues to play out, we should be in a Seller’s Market with appreciating prices for some time.
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. An Absorption Rate of below 4-6 months indicates a Seller’s Market.
Months Supply of Inventory- Boulder County
Inventory levels in Boulder County are historically low, although just this last month we saw a small uptick of housing inventory. The Months Supply of Inventory in Boulder is down 68% as compared to this time last year. Inventory numbers in Longmont, Lafayette, and Louisville are down significantly year-over-year as well. Since all of the inventory levels are still well below balanced market levels of around four to six months, we can expect to see high buyer demand and competition for the best homes in the best condition.
Months Supply of Inventory- Denver, Arvada, Westminster, and Broomfield
The Months Supply of Inventory numbers in the Northwest Denver area indicate a sizzling hot Seller’s Market. All four areas show much lower levels of inventory than this time last year, but again we just saw a small uptick in inventory last month. For the moment we can still expect to see the best homes in the best condition receiving multiple offers and offers well over the list price. This is in line with our recent experience with buyers in these markets.
Showings per Listing
One of the most intriguing pieces of data we came across this month is the number of showings to pending contracts. This is the median number of showings per listing that are occurring prior to a seller accepting a contract. Earlier this year, we were experiencing what can reasonably be called “feeding frenzy” levels of activity. Homes were being listed, showing slots filled within hours, and we were seeing dozens upon dozens of showings per listing. The graph below shows that activity peaked in February and March and has been declining since.
We would guess this dynamic has to do with a few factors. First, as our lives start to get back the old pre-COVID norms (like kids being back in school and folks getting back to work at the office), some of the conditions that have been driving folks to seek a new living space no longer exist. People don’t feel the need to make the lock-down related moves that they did earlier in the year.
Pair all that with increased vaccinations, the fact that buyers are now focusing on other things like vacationing after a long COVID winter, and that buyers are fatigued after a whirlwind spring, and it seems logical that the feeding frenzy of activity is waning a bit.
Only the Denver based Multiple Listing Service compiles showings-per-property data, but we do believe (and are experiencing) this dynamic in both the Denver metro and Boulder County areas.
So what do all of these numbers tell us about how our market is faring this year? What might Buyers and Sellers expect as we head into the third quarter of 2021?
As has been the case since early last year, we are in a market in flux. From shut downs to historic levels of appreciation and buyer activity, we have really seen it all in the last 16 months.
What we can say is that as we make our way into late summer time, the market seems to be moving into a bit of a calmer state. Buyers may have more opportunities in the upcoming months than they have had this year. They may be able to write offers without waiving inspection and appraisal contingencies and have more negotiating power than in the first half of this year. We are seeing fewer showings per listing and we are hearing about some buyer fatigue that could be contributing to less offers per home. Buyers who struggled earlier this year to win a deal may be able to take advantage of this time in the market. Opportunities may present themselves over the next couple months that weren’t there before.
Whether this calmer state sticks around remains to be seen. We still have plenty more buyers than sellers in the market, our area is under built with regard to new construction, and the Front Range remains a popular area in which net positive migration and strong economic indicators fuel a strong housing market.
It may be that after a little rest period when buyers get back from their first post COVID vacation we’ll see things pick up again. We’d guess it would be on a more property-by-property basis though.
Sellers should continue to diligently prepare their homes for sale. Even though the market has remained very strong for sellers, staging, marketing, cleaning, and presenting a home well in the market place with regard to price nets sellers the best results. Sellers who have presented their home well will be best set up to take advantage of what continues to be a strong Seller’s Market.
It would not be surprising if we saw a slow down of the rapid appreciation rates we’ve been seeing in the past few months, but our strong local economy, net positive migration numbers, and the fact that we continue to have a shortage in housing supply will most likely sustain the gains that we’ve made this year.
Until next time!
Allison and Ken