Metro Denver home and condo sales fell nearly a fifth in August from a record in July, but not because buyers withdrew. They had half as many homes and a fifth fewer condos and townhouses to choose from than a year ago.
Despite the sharp monthly decline in closings, the 5,595 homes sold this August were a record for the month in Denver Metro, according to the latest market trend report from the Denver Metro Association of Realtors.
"If there was more, we would have sold more," said Jill Schafer, chair of the DMAR Market Trends Committee and realtor in the Denver area, in comments accompanying the report. "Unfortunately, there weren't many homes for sale in August. The active listings at the end of the month showed how desperate things looked."
At the end of August, 5,496 houses and condominiums were for sale. This was a decrease of 14.8% compared to the already barely July and 41.2% below the stock available in August 2019. In the case of single-family houses, only half as many were available in August as in August 2019. From a perspective of the active stock of Since 1985, an average of 16,550 houses were offered for sale in August, and the supply of real estate almost always increases between July and August.
The imbalance between supply and demand kept prices rising. The average price of a home sold in August reached $ 510,000, up 2% from July and up 12.1% year over year. The average price of a home sold on Metro Denver passed the $ 600,000 threshold for the first time, reaching $ 606,330.
The housing market wasn't that hot. The average price of a condo sold in August was $ 325,000, down 2.4% from July and a modest annual gain of 3.7% as of August 2019. One possible explanation could be related to COVID-19 as urban condos have lost their appeal Buyers are looking for properties with more space in less dense areas.
The lack of inventory seems to be contributing to a "vicious circle" that the region suffered from a few years ago, Schäfer said. When stocks were short, the sellers simply stopped.
"A lot of homeowners say they'd like to move, but inventory is so low that they don't see anything they want to buy," Schäfer said, adding that not listing only makes the problem worse.
The federal response to the pandemic could also distort the real estate market. Record-low mortgage rates have improved affordability and encouraged younger buyers to secure a home. At the same time, owners who cannot afford their mortgages, e.g. due to job loss, have up to a year to skip payments, which reduces the pressure on them to list their properties.
About 7.2% of all domestic mortgages are on forbearance, according to the Mortgage Bankers Association.