In previous years, demand for homes was so intense that it was easy to sell a home, but difficult to find one to move into around metro Denver.
That’s starting to change. In April, the unofficial start of the home buying season, there were 1,852 more homes on the market than the same time in 2018, according to the Denver Metro Association of Realtors. That’s a 36 percent increase and the most active listings in five years.
But as the supply grows, demand has fallen in Denver. The number of sales dropped 7 percent in April. This is a phenomenon playing out across the country, as buyers’ wages fail to keep up with prices.
“I think a lot of what’s happening is that we’re just hitting an affordability ceiling,” said Ralph McLaughlin, deputy chief economist with CoreLogic, a real estate research firm. “Prices can only rise so much before it’s hard for your average household to afford a home.”
Wage growth has finally started to rise in Colorado, but it hasn’t kept pace with real estate inflation. Denver is the most expensive non-coastal market in the country. Average prices hit a new all-time high in April: $553,371 for a single family home, according to Denver Metro Association of Realtors.
Justin Knoll, a longtime metro Denver real estate agent, said it’s “brutal out there under $400,000 and the stuff you’re finding at $400,000 needs a lot of work.”
“At that entry level market, people can’t afford to put a lot of work into it,” he said.
As a result, many of those buyers are stuck on the sidelines.
For buyers who can afford more expensive properties, there are options. That wasn’t the case in previous years, Knoll said, when supply was at or near record lows and demand was frenzied.
“You had to make a decision on the hood of the car right now,” Knoll said. “If you’re going to sign this contract or make an offer on a property, you had to decide right then, because five other people, at least, we're doing the same. But now it’s like, ‘let me think about this overnight, let me talk to my lender again, let me talk to my financial planner.’”
For some sellers, that has been a tough transition.
“We do see sellers start to panic a little bit after a couple of weeks on the market if they don’t have it done. If they don’t have a contract they start to flip out,” he said.
Some sellers still act like they’re in Denver’s old market, thinking they can set high prices and force bidding wars.
For some, it’s still possible if the property is in good shape and in a nice neighborhood. While things might be moving slower in Denver’s market, it’s still a fast-paced environment. Median days on market is just 12, a rate real estate agents say is still very fast — although it’s twice as long as it used to be.
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