For what seems like as long as I can remember (5 years, they say I have amnesia), the real estate market has been dubbed a "buyer's market". Low-ball offers, plenty of properties to choose from, low prices, low interest rates, short sales/foreclosures, seller concessions toward buyer's closing costs and more or less getting exactly what they want. Oh how the times are changing. Gone are the days that buyers get whatever they want, and here's why: - Inventory (homes currently listed for sale in Denver) is down 53.4%. If all of the other variables were constant (which they aren't), this alone would have the pendulum swinging back toward sellers.
- Average Days on Market (DOM) has dropped by 11.7% from March 11 to March 12. What properties are currently available are going more quickly than they did last year.
- Both the average price per square foot and sold price/list price are up (4.9% and 2.9% respectively) indicating both value increases as well as higher priced inventory entering the market.
- The absorption rate (how long it would take to sell all current listings if no others entered the market) is also down substantially (as should be expected with such a drastic decrease in inventory), 55.3% year over year. So if no new listings enter the market, buyers will only be able to get property for another 3.8 months in Denver.
- Mortgage interest rates are still the lowest they have ever been. While I don't claim to be able to predict where rates will go, I do know that inflation is currently in the neighborhood of 5.2% and that my lender quoted FHA 30-year fixed rates yesterday at 3.75%. If rates increase, let's say .5%, a buyer with a maximum purchasing power of $200K is going to see an increase of approximately $100 on their monthly payment, thus decreasing the potential buyers for a given property.
I'm not saying the real estate market is saved, but what I am getting at is that it is getting very competitive to buy real estate in Denver, at all price points, and competition leads to increases in closed prices, so if you have been on the fence about buying or selling, now might be the perfect time to do either.