The often heard complaint from homebuyers and their agents during the pandemic was the lack of active listings, which was not due to a lack of new listings but rather the result of those new listings going under contract so quickly that at any given time there were few to choose from.
It became a crazy sellers market which is only now abating except for “special” homes that are priced appropriately.
Looking only at closed listings, you might conclude that we are still in a sellers market. One measure I have used in the past is the median ratio of listing price to closing price, which remains above 100% within the Denver metro area. In September, for closings within 15 miles of downtown Denver, the median was 0.9% above listing price — declining, but still impressive.
However, if you look below the surface — that is, at the homes that haven’t sold, you see a rising inventory of homes that have been active on the MLS for an increasing length of time.
For example, as I write this column on Monday morning for this Thursday’s newspapers, there are 2,542 active listings of single family homes, condos and townhomes within 18 miles of downtown Denver, 760 of which (or 30%) were only listed on REcolorado in the last 7 days.
Despite so many new listings, the median active listing has been on the MLS for 19 days, and 1,024 of them (or 49.9%) have been active 30 days or longer. Another 552 of them (or 21.7%) have been active for 60 days or longer.
Meanwhile, there are 4,949 pending listings within that same 18-mile radius. Of them, only 804 or 16.2% were active more than 30 days before going under contract, and only 319 (or 6.4%) took over 60 days to go under contract. 221 of those currently pending listings went under contract with zero days on the MLS. Another 2,528 of them (over 50%) went under contract in 1 to 7 days.
Meanwhile, if you look at the 3,509 listings in the same 18-mile radius that closed in the last 30 days, only 401 of them (or 11.4%) took over 30 days to go under contract, and only 318 (or 3.4%) took over 60 days to go under contract.
This is what it looks like as we transition from a seller’s market to a balanced market. To reiterate, nearly 22% of active listings within 18 miles of downtown Denver have been on the market over 60 days, but only 3.4% of recently closed listings were active that long before going on the market.
My bottom-line observation is: Buyers who gave up after losing multiple bidding wars will find greater success if they re-enter the market now. As I’ve suggested in the past, you can avoid a bidding war simply by asking your agent to send only listings that have been active on the MLS for at least 10 days. You’re less likely to have competing buyers for them.
The new listings, however, will still get multiple offers if they are unique or special in one way or another.
For example, we recently listed a home in Golden’s coveted 12th Street Historic District. There was a bidding war on it, and it went under contract for more than $100,000 over the listing price. But if you look at all the active listings in Golden proper as I write this, there is only one new listing. The other active listings have been on the MLS between 11 and 102 days, and all but two of them have posted price reductions.
It should begin to sink in among sellers and their listing agents that they need to be less aggressive in pricing their homes when they put them on the market.
Don’t assume that buyers will flock to your listing regardless of price and compete with each other for it. Price it right, and it will sell. Overprice it, and it won’t.