Just like everywhere else in the country, Denver is a place where sales this year are well off the mark from a few years ago…but Denver is a very different market in terms of how the immediate future looks. The most obvious indicator of that is the surprising lack of supply of homes and condos in lower price ranges, available for sale this spring.
“Denver is a declining inventory market, especially in the starter home ranges,” broker Jack O’Connor told me, as the new month’s Metrolist data came out this week.
O’Connor, former managing broker with Prestige Real Estate Group and one of the principal owners of RE/MAX Professionals, combining Prestige with two large RE/MAX offices, publishes a monthly report to agents on how the market is performing. What the data show now, O’Connor says, is a far cry from what inventory looked like in 2006 and 2007, when sales were higher and when California and Florida were booming.
As of the first of May, inventory in the 7-county area stands at 21,454 homes…almost 10,000 units below the supply on late spring of 2006; about 6,000 less than a year ago.
That’s the smallest supply in six years, O’Connor notes. Even more startlingly, the supply for sale this month actually dropped from that available at the first of April…the first time that’s happened in ten years. “Inventory typically swells in spring,” O’Connor told me. “Having total inventory fall on the first of May is very atypical, and underscores just how low the supply really is.”
In the market under $250,000, where first-time buyers find their opportunities, that calculates to just over 3-1/2 months supply. “That’s obviously a seller’s market, and explains why our agents are reporting multiple offers on some of their lower priced listings,” O’Connor said.
For higher priced homes, the corresponding supply gets larger and the time they spend on the market gets longer. “But when a seller of a lower priced home sells, they can move up,” O’Connor notes. “It takes about six months for that effect to make its way through the next higher $250,000 price niche, and for that range to begin selling faster.”
O’Connor adds that for the most expensive homes, a smaller inventory drop is now likely. “It’s tough to get financing at that price range, but it’s likely we’ll see continued drop in the million-dollar inventory over the next months, as well,” he says.
So, for sellers of high priced homes, help is on the way. For sellers of more reasonably priced homes, O’Connor says, know where your home is positioned relative to others, to negotiate a highest realistic price.
