The number of active listings dropped 43.66 percent in October from a year ago while prices shot to an all-time high, an indication of just how strange this real estate year has become with the pandemic flaring again as 2020 hurtles to a close.
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With an average close price of $561,999 in October, Denver metro homes are more expensive than they have ever been, over 16 percent from a year ago and over 4.5 percent from September. Despite the Covid-19 challenge, and in many cases because of it, Denver has become a hub of activity.
Denver metro home prices October 2019-October 2020. Blue=median closed price; orange=average closed price. Source: Denver Metro Association of Realtors.
With all this heat, some things in the Denver market have remained the same since the market picked up in the third quarter:
- Prices are rising
- Inventory is at all-time lows
- Mortgage rates are at all-time lows
- Homes are selling fast
- Buyers are looking for homes with space for two offices and outdoor entertainment
2021 more uncertain
As someone always preparing for the future, especially this time of year when the market typically cools and we begin getting for the next spring selling season, predictions have become much murkier.
As restrictions pick up again with Covid, increased online schooling and growing uncertainty around business impacts, Denver, like many areas of the country, has officially launched into uncharted territory.
Economists don’t know quite what to predict. In fact, I reached out to a local real estate market expert I trust, Megan Aller, about her assessment of what’s coming next year, and she confirmed my feelings of uncertainty.
The odds of a single-family Denver metro have not been higher in the last 15 years. Source: First American Title.
The pandemic’s course and a vaccine timing play a large role in just how things will play out. Some of the key indicators I’ll be watching closely to determine just which way the market will head include:
- Showings: If showings-per-property or the average number of showings before contract begin decreasing, we could see a slowdown.
- Pending and New Listing Activity: If new listings increase or pending sales drop, then we may see shift.
- The odds of selling: This is a % of all homes available vs. those that go under contract and/or sell in a given 30-day period.
- Price Reductions: A shift to buyer opportunity would reveal itself by more widespread price reductions but at lower amounts.
What buyers and sellers should do now
Even with the uncertainty looming over 2021, there are very clear actions buyers and sellers can take now to take advantage of the market.
Record-low mortgage rates dictate what buyers should do: buy! First-time homebuyers, as well as investors, should jump into the market now if they can.
Two strategies will help buyers in this hot market: negotiate with sellers before they do a price reduction and reach out to sellers of recently expired homes.
Look at homes that have been on the market for approximately two weeks. At about this time, given the extremely fast market in 2020, sellers are likely considering a price reduction. Given the intense buyer competition, buyers can get first in the door and begin negotiating a lower price before the sellers broadcast a reduction to the market.
Homes that didn’t sell and just went off the market are also a good opportunity. These sellers wanted to sell, but didn’t find conditions that met their needs while on the market. Buyers can start negotiations and possibly win a home by starting a conversation.
Sellers who don’t need to sell right away should consider listing in February next year. With Covid-19 putting a damper on a lot of plans, many buyers are pulling back and pausing. Sellers will likely have a better market when by preparing for the spring selling season, typically the busiest time of the real estate year.
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