After several years of an oversupply of homes on the market and an undersupply of qualified buyers, the tables have turned for the Colorado housing market. It may be hard for some consumers to believe, but the local housing markets across the Front Range, including central Denver and the Northern and Southern Colorado markets, have bounced back in a big way. Eager buyers are once again out in force ready to purchase their next home. But ironically, the only thing stopping them is a serious shortage of homes for sale!
We’ve come a long way from the recessionary days when homes sat on the market for many months, or even a year or longer, waiting for a buyer. Today, properties are once again being snapped up quickly, often with multiple offers due to the shortage of inventory. While this imbalance is frustrating some would-be buyers, it is also creating a great opportunity for savvy homeowners who have gotten the message that now may be the best time in many years to sell their home.
In the Denver Metro Area, inventory levels are down more than 44 percent from a year ago. This comes as the economy gains momentum, the job and financial markets improve, and Colorado receives increased national media attention as a top place to live – all providing more ready cash and incentives for buyers to purchase. The result is that there are more offers for good homes for sale. Sellers are getting higher prices and properties are moving faster than they have in years.
Similarly, in Northern Colorado, in areas such as Fort Collins and Loveland, inventory levels are down more than 20 percent from last year at this time, according to the Fort Collins Board of Realtors. Additionally, the number of homes sold and median sales price were both up in March 2012 compared to March 2011.
The ratio of buyers to sellers or balance between supply and demand is critical in any market. While inventory has steadily been declining in Colorado, demand has recently shot up once again.
As a result of dwindling supply and growing demand, we are back to seeing offers with no contingencies in some cases, and buyers making offers on several properties before they actually get into contract on one. Multiple offers of thousands of dollars over asking price is not unusual in some prime neighborhoods. In one extreme example, there were 28 offers on one property that sold over listing price.
Adding to the strong buyer demand are record-low interest rates. Interest rates fell to historic lows again in April. Thirty-year fixed-rate mortgages averaged 3.87 percent, down more than 1 percent from a year ago, according to Bankrate.com. Fifteen year fixed rates dropped to 3.11 percent and adjustable-mortgage interest rates were 2.73 percent in April.
To be sure, the housing market is once again coming alive. Real estate agents are seeing dozens of visitors at some open houses, multiple offers are no longer the exception, but the rule in many communities, and buyers are showing a sense of urgency perhaps out of concern that record low interest rates could be heading higher before long.
As the Denver Post reported this month, “Metro Denver’s real estate market, not long ago a buyer’s domain, suddenly has shifted to a seller’s paradise, at least in some neighborhoods and price ranges.”
A new report by the National Association of Realtors finds that the Denver Metro Area is second in the nation for the shortest length of time that a home is listed before being sold — 33 days — far below the national median of 89 days.
In particularly high demand are homes priced from $250,000 to $400,000. Even though Colorado homes have shown only modest price appreciation so far this year, most industry experts are saying that strong demand and multiple offers could soon push values higher in lower to moderate price ranges.
But buyer interest isn’t limited to entry level and mid-priced housing. The luxury market has also seen a strong surge in sales and buyer demand over the past year.
There were 50 homes sold priced over one million-dollars in March along the Colorado Front Range, up from 31 the previous month and 42 a year ago. Homes sold in an average of 129 days, down from 206 in March 2011. And the median sale price jumped 9.1 percent in March from the previous month to $1,325,000.
To be sure, the local housing market is alive and well with robust buyer demand. Now sellers need to sense the same pent up demand, excitement and urgency in the market that buyers have sensed for the past year. They need to take the long postponed leap to list their homes for sale now.
Simply put, there just aren’t enough homes on the market to meet the tremendous demand from buyers. And this is true in all price segments, from small starter homes and condos right up to multi-million-dollar Previews International properties.
The days of buyers being only interested in distressed properties at bargain basement prices are over. Homebuyers are pounding the pavement looking for good, well-maintained properties at fair prices in every segment of the housing market.
The real estate market has always come down to two simple factors: the law of supply and demand, and consumer confidence. Right now, both of those are creating a sellers’ market here in Colorado. Consumers are feeling more confident as the economy picks up steam and the stock market turns in strong gains in 2012. Clearly, the scales of supply and demand are tipping heavily in favor of sellers today.
Smart, strategic homeowners understand all this, and they’re making their moves right now – not six months or a year from now. They’re the ones getting multiple offers for their home because there just isn’t a lot of competition for buyers’ attention. They’re out there now, before everyone else joins the "house party" and tips the scales back in favor of buyers once again.
If you’ve been thinking about selling your home, now is the time. I’m happy to answer any questions you may have – and to help you get the very best possible price for your home while demand is so strong.
