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A Time for Deep Breaths and Clear Thinking
Have you noticed? Things have been a little topsy-turvy in the metro Denver real estate market lately.
About a year ago, it was common to see sellers taking multiple offers over the weekend and picking the best one out of the stack on Monday. Now, sellers are making price adjustments to entice buyers, and buyers are walking away from up to 1 in 3 deals due to inspection issues.
From my perspective as a Denver-area REALTOR® for more than 15 years, I’d say the market is returning to a more balanced state.
Buyers seem to be less panicked and are taking their cue from Mr. Blissful Frog above. They’re slowing down, taking some deep breaths, and making offers only when they’re clear on their priorities and dealbreakers.
Sellers, meanwhile, are having to look at their homes with clear eyes. Smart pricing is key now (actually, it always is). So is making sure their homes are truly move-in ready, with no deferred maintenance or items that will cause inspection hiccups.
Here’s a look at what’s happening and what it may mean for buyers and sellers. (Statistics are for the market as a whole — combining single-family homes and condos/townhomes — and are courtesy of the Denver Metro Association of REALTORS® Market Trend Report for September.).
Days on Market Up
Average Days on Market rose significantly for both single family homes and condos. Average days on market went up 25% between July and August for single family homes, from 24 days to 30 days. That’s an increase of 25% over this time last year. Average days on market for condos went up 10.34% between July and August, from 29 days to 32 days. That’s a whopping 60% increase over this time last year.
Seven Weeks of Inventory
There were a total of 9,350 Active Listings in August and 5,219 Sold. That works out to 1.8 months – or roughly seven weeks – of inventory. In other words, if sales continue at the current pace, it would take 7 weeks for every home currently on the market to sell.
Under Contract Doesn’t Mean Sold
Across the Denver metro area, 3.64% more homes went Under Contract in August compared to July. Going under contract was no guarantee of a closing, however. Nearly 11% fewer homes sold in August than in July.
Buyers Bailing Over Inspection Issues
In fact, title companies report that nearly 1 in 3 closings are falling through due to inspection issues. In last year’s market, buyers were ready to overlook cosmetic issues in order to get the deal done. With more homes on the market now, buyers are being tougher on inspection issues and not backing down from what they want.
What can sellers do? I recommend they consider getting their own pre-listing inspection. This gives them a heads-up to any potential issues. That way, they can plan and budget for potential buyer requests. The only down side to this is that once the sellers or I know about a material defect, we must notify buyers. (In my experience, these situations only rarely scare off a buyer from purchasing. Regardless, transparency and honesty are always good ideas!)
Fewer Homes Sold; Homes Sold for Less than Last Month but More than Last Year
The total number of units Sold decreased by nearly 11% from July to August (5,858 in July vs. 5,219 in August). This is also a decrease compared to this time last year – there were 5,664 units Sold in August 2018, resulting in a 7.86% annual drop.
The Median Sold Price fell 1.16% in August, from $430,000 to $425,000. The ratio of Close Price to List Price also dropped very slightly (0.18%, from 99.3% in July to 99.12% in August). As the ratio drops below 100, it indicates that homes are selling for less than list price. However, a year ago the Median Sold Price was $408,000. So sellers got more money this August (4.17% more) than they would have this time last year.
Why Buyers are Gaining Power
Quite simply, there’s more inventory in some segments of the market than there has been for some time. So buyers are taking their time and looking at more homes before they make an offer. Additionally, buyers who have full loan approval and can close quickly (under 3 weeks) are often able to negotiate price and terms in exchange for seller confidence in a quick, clean closing.
Time to Sell? Time to Buy? Time to Call Me
No matter what your goal is in regard to real estate, I can help you achieve it. With 15+ years of experience, advanced training, and consistent 5-star reviews, I am perfectly positioned to guide you to a successful closing as either a seller or buyer. Give me a call at 303-204-6494.