While the spring selling season usually means new home listings sprout up all over the city, this year, those listings are failing to emerge, according to the Denver Metro Association of Realtors’ (DMAR) monthly report.
“We have been eagerly awaiting to see how the spring market would perform,” notes Chair of the DMAR Market Trends Committee Libby Levinson-Katz in the report, “and unfortunately, inventory remains extremely tight as homes go off the market almost as quickly as they become available.”
At the end of April, there were 4,620 active listings for single-family residential homes in the metro area. While that is 2.3% more than in March and 44.19% more than last year at this time, it is far below the historical average of 14,296 (since record-keeping began in 1985).
New listings, according to Levinson-Katz, dropped 30.94% from April of 2022.
“Traditionally, at this time in the spring selling season, we see an increase in both active listings at month-end as well as new listings. The sluggish movement in these categories leaves a lot to be desired,” she adds.
The historical average increase in active listings from March to April is 10.41%, compared to this year’s 2.3% increase. That’s the lowest change since 2014, which showed a decrease of .57%.
Part of the reason for the low inventory, experts surmise, are higher mortgage interest rates. Existing homeowners with low rates are reluctant to sell and then take out a new mortgage for another home at today’s much-higher rates. This year’s leap in assessor’s property valuations– with an average 33% increase– have also stoked concern over affordability.
Finally, a large number of homes have been purchased by investors. As many as one in seven homes sold in the metro area between the first quarter of 2021 and the fourth quarter of 2022 fell into this category. This situation is also common nationally, according to DMAR, with investment and rental properties comprising the “second largest number of property listings” currently.
On the bright side for buyers, the bidding wars and far-above-list closing prices seen in recent years are now less common and more mild. In fact, despite home prices rising in the early months of this year, the average closing price dropped 5.6% from last April, to $682,061.
Still, Levinson-Katz doesn’t beat around the bush when summing up the situation. ”The real question on everyone’s mind is: when will more inventory hit the market?” she notes. The answer won’t be welcome by many: “It remains to be seen,” she says.