Not only are home prices rising in the Denver metro, but sellers in many cases are receiving offers $15,000 or more above their initial asking price.
Roughly 30% of the Denver-area homes that sold in September traded above their list price — more than double the percentage from the same period a year ago, according to a new study by Zillow.
The rate of homes selling above list price in Denver outstripped the national average of 22.4%. Of the 50 largest metros in the U.S. analyzed by Zillow, Denver was one of only five regions to see its share of home sales above list price double year over year, from 14.4% in September 2019.
The other metros were Phoenix, San Diego, Virginia Beach and Riverside, California.
In the Denver metro, homes that sold above list typically went for $15,715 more than their list price, the analysis found.
Competition appeared to be steepest for homes in the lower-middle fifth of the market, priced between $354,990 and $430,000. Of the total number of Denver-area homes that sold in that price range in September, 44.5% sold above list, Zillow reports.
A substantially lower 19.1% of Denver-area homes priced in the top fifth of the market sold above the initial list price.
Low inventory and quick sales are helping prompt these above-list offers. Active residential listings in the Denver metro at the end of October stood at 4,821, a record low for the month by nearly 2,000 listings, according to Denver Metro Association of Realtors' latest market trends report.
Denver-area homes spent an average of 24 days on the MLS, another record low for October. The median closing price for a detached single-family home was $519,900 in October, up 14.26% from a year ago and 1.94% from September.
"The housing market is taking us all back to Economics 101 and teaching lessons about supply and demand,” said Zillow senior economist Chris Glynn. “A persistent interest in buying and moving is creating an imbalance that is driving prices higher than we typically see at this time of year. In many cases, buyers in this market should be realistic about the chance of bidding wars and leave themselves financial flexibility by looking at homes listed for less than their maximum price point. With tight inventory, low interest rates, and robust demand from households re-evaluating their housing needs, a strong, competitive market with many transactions is likely here to stay into 2021.”
The strong demand in the Denver area and nationally is likely driven by buyers wanting to lock in low mortgage rates, Zillow’s report says. Buyers may also be taking advantage of the newly found freedom to work from home by relocating.
Nationally, 22.4% of homes sold above list in September, more than in any month since at least January 2018. That share has grown each month so far this year, pushing well past the typical high point as the market continues to defy seasonal norms, Zillow’s analysis shows.
The percentage sold for more than their initial list price was up from 20.2% nationally in August and well above the roughly 15% of homes that did so during September 2018 and 2019.
It is highly unusual for the share of homes sold above list to continue rising this late in the year, Zillow’s report notes. In both 2018 and 2019, the share peaked in July during the height of the typical home shopping season before steadily declining as the market cooled in the fall and winter months.
Buyer demand has been intense since the market picked up speed in April after a dramatic slowdown in the early days of the coronavirus pandemic.
If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.
