Anyone currently house-hunting in Denver knows that the market is crazy right now! But are there any real estate deals to be found in Denver?
It's no big secret that Denver's real estate prices have been on an ever-more-depressing climb over the last three years. Even while other parts of the country stay stagnant, a few select cities in Colorado have been experiencing super-sonic growth. This growth has created a rough market for prospective Denver home buyers. Rising prices have pushed some buyers out of the market completely, while others find themselves battling for a limited number of properties. Sellers who don't want to enter that battle themselves instead sit on properties, waiting for a better time to make their own move, resulting in historically low inventories. Low inventory and high prices have been the norm. In this competition, are there any real estate deals to be had in Denver?
Good news! Even in this difficult market, it's still possible to find a deal in the Denver real estate market. Single-family homes statistically show a 3.5 percent difference between the asking price and the final sale price. Normally, this is a discount in the favor of the buyer.
The current median asking price for a detached single-family home in the Denver Metro area reached $425,000 in June of 2017. The median sold price at the same time was $410,000. This means that homes sold, on average, for $15,000 less than their asking price. In fact, on average homes listed for $400,000 and more sold for 4.5 percent less than their asking price in June. Interestingly, the opposite is true of single-family detached homes listed for below $400,000. Sales in this price range were 1.5 percent higher than asking price, due to the continued high demand and lack of inventory in the lower price ranges.
Why the Difference?
Higher-price homes have a small universe of potential buyers. The higher the price, the fewer people there are who can afford to make the purchase. There has been a lot of demand in the over $400,000 level for the last couple of years, but demand is beginning to lighten. Part of that shift is due to new construction.
New builders are making quick work of new developments across the entire Denver Metro area. These builders are maximizing their potential profits by building homes in the higher price ranges. This softens the demand for higher-priced homes, but offers no relief for the under $300,000 buyer.
Here's the Deal
Real estate deals exist in Denver. They can be found in the higher-priced homes. There is more inventory, extended time on the market, fewer buyers, and generally more room for negotiation. If you can afford the higher end prices, opportunity awaits you. Deals on the lower end are, unfortunately, still elusive. Even investors are running into this issue, finding that competition with home buyers is leaving them with no inventory and no margin. Buyers in the Denver market are buying properties in just about any condition, just so they can actually have a home.
There is some good news for anyone in the lower price brackets. The shift we're seeing in the higher price points is a likely sign of a changing market. Hopefully, before too much longer, we will see a shift from a seller's market back to a buyer's market.
Have you noticed a shift in the market? Has your house search been affected by the competition? Tell us about it in the comments below!