The truth about Denver’s home inventory
By Terry Wenze and Lon Welsh, Your Castle Real Estate
If you have not heard already, the inventory of homes on the market in Denver has been declining. This is not true in many regions of the county. Your clients, who often see only national headlines, might not be aware of this favorable news. Our market has some unusual factors at work. Let’s explore them, so you can better help your clients.
If you look at the first chart, you’ll see the months of inventory (MOI) for Denver’s suburbs on the bottom axis and the average sales price in that suburb on the axis on the left side. Denver metro currently has about six months of inventory (a balanced market, on average), but you can see there is a lot of variety from one city to the next. Lower cost areas, such as Thornton, are seeing inventory move fast. Sellers (mainly banks) don’t have to wait long for offers. Thornton’s average price in the last year was around $250,000 and the average MOI was about three months. Greenwood Village, on the other end of the scale, had about 13 MOI and an average price of about $1.4 million. Sellers are suffering there. The city of Denver is about in the middle.
If you look at the second chart, you’ll see the MOI information sorted by the price of the home. In some cases, this might be more useful when you meet with clients. The city of Denver, for example, has many neighborhoods with homes under $100,000, and they are selling fast. On the other hand, upscale neighborhoods like Cherry Creek and Hilltop have significant levels of inventory and it’s taking a long time to get homes sold, especially over the $1 million price barrier.
The left part of the chart show what percent of the active listings are REO (in red) and which are regular sellers (in green). For homes priced between $0 and $100K, regular (e.g.,, non-bank) sellers are 17 percent of the active inventory, but only 12 percent of the sales in the last twelve months. You can see on the left that since they are not getting their “fair share” of the sales, the MOI for the regular sellers under $100K is 2.7 months. For REO under $100,000, it’s a blazing 1.9 months. This probably isn’t a surprise to any REALTOR® who has written an offer for a low priced REO and the listing agent has told them their buyer is competing with ten other offers. It’s a strong seller’s market at this price point!
Compare the homes from $480,000 to $1 million. Here, MOI is around 14 months - a very slow market. Your seller’s experience with marketing time depends greatly on their price. Perhaps this information will help you demystify our market for your clients.
Source: Your Castle Real Estate analysis, MLS data |
