The Denver residential market is starting to pick up from the end of last year! The 10-year average for new listings is 4,141 for the month of January, but we only saw 3,637 new listings this month. The inventory is increasing and currently we have 3 months of inventory. Mortgage interest rates with a 30-year term ended January at 6.63%. 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 January 2024.
Supply
In January we had 3,637 new listings hit the market! This is up 130.0% from December. Fortunately, this is up 13.0% compared to January 2023.
The total amount of active listings at the end of the month was 6,137. This is up 4.6% from January 2023. The 10-year January average from 2014 to 2023 is 5,751 listings, so we are below our long-term average.
The most recent report for detached home construction starts is Dec 2023. The Denver Metropolitan Statistical Area (MSA) pulled permits on 1153 homes. This is higher than the three year average of 894 for December. Year to date construction starts for 2023 compared to the same period in 2022 shows a (12.9%) decline.
Demand
Showings are a great leading indicator for demand in the residential real estate market. There were 45,540 showings booked through the largest showing service in the Denver metro area during January.
This is down (2.7%) when compared to Jan 2023 and up 184.0% compared to Dec 2023. The average amount of showings for January, over the last four years, is 81,624.
Denver had 3,187 properties go under contract in January 2024. This is up 6.3% compared to January 2023 and up 39.2% from December 2023.
There were 2,101 closings in Jan 2024 compared to 2,645 in Dec 2023. This is a (16.9%) decrease from last month. A year ago, we had 2,111 closings in Jan so the volume of closings is down (0.5%) YOY.
The median days on market for Jan 2024 increased to 35 days from 29 days in Dec. 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 raised, compared to the end of 2023. The median price in January was at $560,000, but compared to in December it was $549,950. This metric includes detached and attached properties. The median price has increased $30k from last January.
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 4.7% from last year! Compared to last month, January is up 1.8% from December.
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 6,137 listings on the market and 2,101 closings in January, the months of inventory is at 3 months or 12.52 weeks of inventory. Therefore, the inventory is still low, but is continuing to pick up. We are expecting it to slowly increase.
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, 3 months of inventory still quite low.
Link to the full presentation: Denver Metro Residential Market Update Jan 2024.pdf