October was another stellar month for residential real estate in the Denver Metro area! The market continues to set new records with high demand and low inventory. Furthermore, KC Conway, Chief Economist for CCIM, is reporting that Colorado is in the bottom 5 states for mortgage delinquency. Even though CO has had an increase in the number of delinquent loans, we only have 4.69% of loans delinquent at this time. As a side note, Mississippi has the highest level of delinquent loans at 11.73%. Yikes! Let’s take a look at demand, supply, average sales price, and months of inventory.
Demand
Demand is still very strong in Denver with showing activity up 29.6% YOY. Since June, the market has steadily held higher in the number of showings compared to the same month last year.
Nearly 6,000 buyers had contracts accepted by sellers on homes in October. These contracts represent an increase of 31.3% YOY. Closings are up 24.7% YOY with 6,346 closings in October. We fully expect a slight seasonal slowdown in November and December (due to the holidays) while still significantly beating the number of sales in 2019.
In addition, buyers with a good credit score and a down payment are seeing 30-year interest rates in the high 2.75% range and 15-year interest rates in the 2.5% range. The low cost of capital is helping to make homes more affordable.
Supply
We still have a lack of willing sellers in this market. Active listings are down (40.6%) from this time last year. What?!?! Yep! The lack of available properties has been and will continue to put additional pressure on buyers.
Average Sales Price
The combination of solid demand, lower interest rates, and lower inventory has put upward pressure on prices. The average sales price is 15.4% higher YOY at $552,283. This includes condos, town homes and detached single family properties.
Months of Inventory
The months of inventory measurements helps us identify what kind of market we are in. If we have 0-3 months of inventory, we are in a seller's market and prices will be going up. If we have 4-6 months of inventory, we are in a balanced market where neither the buyer nor seller has the upper hand. If we have 7 or more months of inventory we are in a buyer's market where prices will come down. As of October 2020, we have again 1 month of inventory, so we are firmly in a seller's market!
Final Thoughts
Demand is still strong. Supply is still low. Sales prices are still up, and months of inventory are low. All of these factors indicate the Denver Metro Residential Real Estate Market is quite healthy and will stay in a seller’s market for now.
Here is a link to the market presentation:
Denver Metro Residential Market October Update 2020.pdf
Here is a link to a 2 minute video highlighting the major points: