Denver’s real estate market has remained a seller’s market for the last handful of years. There are far more buyers than there are sellers, leaving the power scales tipped in favor of those listing their homes for sale.
The start of 2018 saw no change in this dynamic… active listings hit a record low in January even though new listings increased since this time in 2017. Yup, that means that there were more buyers too! Regardless of the reason, Denver’s listing shortage continues to take hold of the residential real estate market.
Of course, home values continue to inflate, reaching an average of $449,429 this month. That’s almost a 12% increase since January of last year and scarce listings are at least partially to thank/blame.
What buyers and sellers really want to know is, “when will Denver’s listing shortage let up?” This is hard to answer, given that even experts don’t agree as to why it’s existed thus far. Certainly, many factors play a role in Metro Denver’s lack of residential real estate inventory:
There Aren’t Enough New Builds
The number of newly built homes have lagged behind the number of new Colorado residents, yearly. Experts believe this is because building entry-level homes is simply not profitable for developers.
Potential Sellers Want to Continue to Gain Equity
With home prices increasing quickly in and around Denver, many homeowners opt to hang on to their growing equity. Why not continue to capitalize on that 2-fold equity increase? And, while you’re at it, use a bit of that equity to remodel your existing home?
Potential Sellers Are Hesitant to Become Buyers
The tight buyer's market impacts sellers too… once they sell their home, they’ll have to find a new place to live. Many potential home sellers may fear that they won’t be able to afford the home upgrade they have in mind or that the process will simply be too stressful.
When Denver sees more listings, the market will steady - creating a situation where home prices increase at a more reasonable pace and home buyers are under less pressure. But, in a market where potential sellers are apprehensive about listing their homes because of the strong seller’s market, will the cycle ever break?
The most likely road toward a balanced Denver real estate market is via new builds. If Denver can make detached new builds profitable for developers (at an affordable rate for home buyers), the pressure of our intense market may just lift. But, as it stands, listings are in short supply. It’s a great time to sell, but if you’re buying, gear up for a spirited spring season, just like we’ve seen in years past.