Like the weather, the Denver housing market cooled in December, with falling inventory, price reductions and a lower number of closings.
In other words, a market that was once sizzling is now on simmer.
According to the Denver Metro Association of Realtors’ (DMAR) monthly report, already-tight inventory decreased 27.92% from November to December and almost 10% from December of 2018.
Despite lower supply, residential prices dropped slightly (.33% from November) to an average of $484,812. And the number of closings fell 10.72% from a year ago.
Additionally, homes took longer to sell, remaining on the market an average of 41 days, 17.14% longer than in November.
Many experts note that affordability has become a significant issue. The DMAR report, for example, states that average workers can no longer afford a home in the metro area.
“A study by ATTOM Data Solutions calculated the income needed to make house payments – including mortgage, property taxes and insurance — and compared it to the average wages and found that residents in the entire Denver metro area would have to spend more than the 28% debt to income recommended,” notes DMAR. “Boulder County was the least affordable with 54.1% of the average monthly salary needed to afford the median priced home. “
“Affordability is key to price growth projections,” Lawrence Yun, National Association of Realtors’ chief economist, told the Denver Post. Formerly hot markets like Denver, Austin, Texas, and Salt Lake City will all see slowdowns, he adds: “Going forward they will lose some momentum, given their strong performance in the past.”
The rate of home appreciation in the Denver metro area have ranked among the highest nationwide in the past several years, with eye-popping increases year over year. But costs vary dramatically based on zip code, according to Megan Aller, Denver real estate statistician and account executive for First American Title.
In numbers crunched several months ago and reported by Westword, Aller discovered the following:
- Prices are generally high close to the urban center.
- Zip codes 80403 and 80439, including parts of Golden and Arvada, are on the pricey side, with Cherry Hills Village (80111) the highest.
- Zips codes where homes sold above list price include 80249, which includes Gateway and Green Valley Ranch. “The prices there were among the most reasonable in the city, hovering around $300,000,” notes Westword.
- Price reductions “happened less often in zip codes on the outer edges of the metro area, such as 80107, which includes Elizabeth and Ponderosa Park.”
- Most affordable homes are generally east, northeast and north of the metro area.
- Northeast and east of the city, buyers can find houses “just under $300,000.”
- Aurora offers some of the lowest prices, particularly in zip codes 80012, 80014, 80017 and 80247.
- Price cuts were common (“well over half”) in 80225, which includes Roxborough Park, Highlands Ranch and Littleton.
In light of the latest market information, most sellers will need to lower their expectations of reaping top dollar for their homes. They would be advised to complete any necessary repairs and be willing to negotiate on prices and concessions, notes the Post article.