Inventory remains top of mind in sizzling housing market
What will homebuyers sacrifice just to get in on a piece of the action?
The Denver real estate market has recently become a hotbed of conflicting cause-and-effect discussion. Our condominium regulations (construction defects reform) have gained national attention, while our scorching home prices seem unstoppable to everyone except those who worked and survived the 2008 market. Instantaneous streams of offers and acute pressure on our infrastructure are all real concerns to the market overall, but perhaps the most important fact: a paralyzing lack of inventory.
The median sales price for a single-family home in the Denver metro area has risen consistently since July 2010 from $246,349 to $420,000, according to data provided by the Denver Metro Association of REALTORS®. During that same time, the average month’s supply – or the number of homes available in relation to demand – has entered a free-fall after more than a half-year’s-worth (6.6) to just over a month and a half (1.7). Buyers seven years ago could do something that today’s buyers couldn’t even imagine: they could ‘Think about it.’ They could analyze their needs and wants and make strong, educated decisions. They could carefully contemplate the life-altering shifts underfoot, and a home seller would need to wait until the ‘right one’ came along. Sellers couldn’t paint their basements orange or covert their den to a miniature railroad museum because they knew that appealing to the universal audience was crucial to hooking the proverbial ‘one.’
It’s no wonder prices have climbed as we enter the latter part of the decade; there are too few options available to the consumer. This conflict exists because we took too long to build what homebuyers wanted post-recession and today’s seller is apprehensive to reenter the marketplace.