The Denver residential market is slowing down, but still looking good for December! The 10-year average for new listings is 4,676 for the month of December, but we only saw 1,581 new listings this month. The inventory is decreasing and currently we have 2 months of inventory. Mortgage interest rates with a 30-year term ended December at 6.62%. Let’s dive into the key market data for Denver residential real estate market to see what is happening with supply, demand, sales prices, and months of inventory for December 2023.
Supply
In December we had 1,581 new listings hit the market! This is down (37.0%) from November. Unfortunately, this is down (3.1%) compared to December 2022.
The total amount of active listings at the end of the month was 4,666. This is down (10.1%) from Dec 2022. The 10-year November average from 2013 to 2022 is 4,676 listings, so we are below our long-term average.
The most recent report for detached home construction starts is Nov 2023. The Denver Metropolitan Statistical Area (MSA) pulled permits on 766 homes. This is lower than the three year average of 842 for November. Year to date construction starts for 2023 compared to the same period in 2022 shows a (13.1%) decline.
All in all, the supply is in a better position compared to 2021 and 2022 but is still lower than 2019 and 2020.
Demand
Showings are a great leading indicator for demand in the residential real estate market. There were 16,038 showings booked through the largest showing service in the Denver metro area during December.
This is down (47.3%) when compared to Dec 2022 and down (55.8%) compared to Nov 2023. The average amount of showings for December, over the last four years, is 48,422.
Denver had 2,289 properties go under contract in December 2023. This is up 11.3% compared to December 2022, but is down (3.1%) compared to November.
There were 2,528 closings in Dec 2023 compared to 2,623 in Nov 2023. This is a (3.6%) decrease from last month. A year ago, we had 2,884 closings in Nov so the volume of closings is down (10.4%) YOY.
The median days on market for Dec 2023 increased to 29 days from 22 days in Nov. This means that the market is slowing down, houses are sitting on the market for about a month before they are sold.
The list price to close price ratio held steady at 99%, so sellers are generally getting what they are asking. With that said, I have seen homes that are over priced sit on the market for a long time.
All in all, demand for housing is soft when we look at showings but decent when we look at closings. Let’s look at the median sales price.
Sales Prices
The median sales price has slowly increased this year, but in the last month it has gone down. The median price in December was at $550,000, but compared to in November it was $565,000. This metric includes detached and attached properties. The median price has stayed the same compared to Dec 22.
The long-term average appreciation for residential real estate is 6%. Higher prices and higher interest rates will continue to temper appreciation in the short run. Tight inventory is helping to prop up the market.
This month, prices were up 1.1% from last year! Compared to last month, December was (2.7%) down from November.
Let’s look at months of inventory now.
Months of Inventory
The months of inventory is a great indicator to watch for market trends. Typically, a seller’s market has 0-3 months of inventory. A balanced market has 4-6 months of inventory, and 7+ months of inventory is a buyer’s market. In a seller’s market prices go up. In a buyer’s market prices go down.
With 4,666 listings on the market and 2,528 closings in December, the months of inventory is at 2 months or 7.91 weeks of inventory. Therefore, the inventory is still low when compared to the demand. We expect the months of inventory to continue to be low this year.
All in all, months of inventory is a great metric to watch.
Final Thoughts
In conclusion, supply, demand, median sales price, and months of inventory are ideal key performance indicators to watch for market trends. Supply is higher than the record lows of 2021 and 2022 but is still lower than the long-term average. Overall demand is there, even with higher prices and higher interest rates. We believe there is a tremendous amount of pent up demand happening right now and as soon as rates come down, more buyers will enter the market. Lastly, 2 months of inventory still quite low.
Here is the link to the full presentation: Denver Metro Residential Market December 2023.pdf