Denver Real Estate Market Ends 2020 with a Record-Breaking December

The chart below is a compilation of various market indicators for the Denver metro area, which I am defining as a 25-mile radius of the State Capitol. There are some surprising differences this December from previous Decembers to be discerned from looking at that chart. I have included June figures but put the December stats in bold type to make it easier to compare summer vs. winter statistics over the last five years.

Source: REcolorado

Historically, one would expect to see more sold listings, new listings and active listings in June than in December, and that trend held true in 2020, but the numbers for this December broke some new ground.

The number of sold listings and new listings were at record highs for a December, leaving the number of active listings at a record low. There has been lots of talk about how low our active inventory is, but, as I’ve written before, that’s not for lack of new listings but rather how quickly buyers are snapping up new listings.

The strength of this sellers’ market becomes more evident when you look at the other columns. In past years, the median sold price in December was substantially lower than it was in June, but the opposite was true this year, rising to a record $455,000. Correspondingly, the average price per finished square foot surged above June’s number to a record $246, and the median days in the MLS (“DIM”) plunged from last December’s 24 to just 7 days this December — even lower than the DIM for June 2020. The average DIM of 28 is more typical of summer months than winter, reflecting the fact that even homes that had been languishing on the market (because they were overpriced) were selling at a faster clip last month. Indeed 22% of the listings sold were on the MLS for over 30 days. Of those, 5.8% were active over 90 days, and 3.4% were active for more than 120 days. Those older listings are responsible for raising the average DIM.

Because of the well-publicized migration away from densely populated areas because of Covid-19, I was curious to learn whether single-family detached homes represented a higher percentage of the closings this December, compared to December 2019, but in fact the percentage dropped a little this year — 66.7% this year vs. 69.5% last year. The same was true in June, when the pandemic was already raging and we believed that people were fleeing condos for detached single-family homes. This is counterintuitive, and I can offer no theory to explain it, but I have more to say about this topic below.

Another measure of the strength of the current sellers’ market is how many homes sold above their asking prices. With December 2019’s days in MLS number so high (24), one hardly needs to ask, but here are the numbers. This December, 16.6% of the listings sold for their full listing price, and 42.2% sold above their listing price. Last year, those numbers were dramatically lower. While 15.8% sold for their full listing price, only 15.9% of listings sold above their listing price in December 2019.

So, what’s the prognosis for 2021?  January is positioned to have a record number of closings, considering that there are a record number of pending transactions left over from December, as shown in the chart. With mortgage interest rates projected to remain at record lows — currently at or below 3% — there is a strong incentive for buyers to keep buying. Another factor favoring buyers is the movement of service sector jobs towards working from home.

To measure that trend, I compared the December-over-December sales in Downtown Denver, part of Capitol Hill and the Golden Triangle (specifically, a 1.2-mile radius from 20th & Arapahoe Streets in downtown Denver) and found there were 63 sales in December 2019 compared to 77 sales in December 2020. Meanwhile, there were 272 active listings in December 2019, but that surged to 444 active listings in December 2020.  It’s a buyer’s market there.

In that same area, the days in MLS dropped from 43 days last December to 32 days this December (way higher than the 24 days vs. 7 days for the 25-mile radius in the above chart), but the median sold price plunged from $535,000 in December 2019 to $480,000 in December 2020. Compare that to the $40,000 increase in median sold price with the larger metro area, as shown in the above chart.

So, yes, it is still harder to sell a home in the densely populated central Denver area, and there is definitely an out-migration taking shape, but it’s still too early to call it an exodus.

Note: All these statistics were compiled from REcolorado, Denver’s MLS, excluding listings from other MLSs which are displayed on REcolorado.com. Often those listings from other MLSs are merely duplicates of REcolorado’s own listings, so I excluded them.

As Winter Approaches and Covid-19 Lingers, What’s the Denver Real Estate Outlook?

As I write this, the real estate market is a tale of two cities — or, more accurately, a tale of cities vs. suburbs. Because of the virus, Americans are “getting out of Dodge,” leaving the congestion of multi-story buildings and moving to the suburbs and the countryside.

The statistics tell the story. In a recent 30-day period, 46% of the sales in Jefferson County closed above their listing price after being on the MLS for a median of 5 days. It was quite the opposite in downtown Denver. There, during the same 30-day period, 87% of the listings (primarily condos in elevator buildings) sold below their listing prices with a median time on the MLS of 24 days.

It’s the same story nationwide, and for good reason. People are fearful of catching Covid-19, and they know that being in close quarters can’t be good. In the suburbs they can take their dog for a walk without using an elevator and without having to come within 6 feet of another human being.  (I’m describing my own life here — I walk my dog Chloe every morning on a one-mile circuit around my subdivision and never come in close contact with the neighbors I encounter. Because of that, I don’t even need to wear a mask on these walks.)

We keep hearing that the inventory of homes for sale is at record low (except downtown), but that’s only true because homes are going under contract so quickly. The chart below, generated on REcolorado.com, tells the story well.

Using the most recent full-month MLS statistics for Jefferson county (September 2020), you can see that we actually had more new listings this September than in any of the five previous Septembers, yet the number of sold listings was nearly the same, so there was no way the number of active listings was going to increase and was, in fact, lower by far than the number of active listings in the five previous Septembers. The median time on the MLS of 5 days tells you why.

Moreover, the average ratio of sold price to listing price in Jeffco was 100%, as it had been every prior September except in 2019, and the price per finished square foot has continued to soar. The situation is similar in all suburban counties.

Clearly, the takeaway from this analysis is that if a homeowner is thinking of selling their home anytime soon, he or she would be smart to put their home on the market right now. Don’t think that just because winter is coming that buyers aren’t actively looking for homes. Last week in this column I promoted a 1973 ranch in Arvada that was “not particularly updated.”  It didn’t even have a garage door opener for its one-car garage, and it had a backyard clothes line instead of a dryer. Yet that home attracted over 50 agent showings in 72 hours and 11 offers by Saturday evening, when it went under contract for $30,500 over its listing price.

A recent real estate industry article predicted a terrible winter for us real estate agents because of low inventory, but there are just as many homes for sale as ever — maybe more.  You just have to act quickly because they are selling right away. 

Another recent listing of mine also illustrates how hot the market is. The very first offer for my $530,000 tri-level listing in central Lakewood came in at $585,000, apparently from a buyer who had lost out in previous bidding wars and didn’t want that to happen again. The strategy worked, because no other agents would submit an offer when they learned that we had one that was $55,000 over full price.

Are you wondering what you might be able to get for your home?  It costs you nothing to get a comparative market analysis from a real estate agent, and, regardless of where your home is, my broker associates and I are happy to provide that for you.  Call us!

Affordable Condo in Denver’s Capitol Hill Just Listed by Chuck Brown

1045 Pennsylvania Street #403 — Just listed for $219,000

Broker Associate Chuck Brown just listed Unit #403 in the Penn Condos building at 1045 Pennsylvania Street.  This 1-bedroom, 1-bath condo has been completely remodeled. All appliances and fixtures are brand new, the honey colored oak flooring has been refinished, the kitchen and bath have new tile and cabinetry, and the unit has been repainted throughout. The building is solid, clean, secure and well managed, featuring off-street parking, mature landscaping and views of downtown Denver from the unit.  Located within a block of two historic districts in Denver’s Capitol Hill neighborhood, this condominium is central, quiet and convenient, within easy walking distance of shops, entertainment, the State Capitol, Denver Public Library and the Colorado History Museum, as well as downtown Denver. You can view a narrated video walkthrough of this condo at www.CapitolHillCondo.info, then call your agent or Chuck Brown at 303-885-7855 for a private showing!