How did Denver become such a strong seller's market?

Asked by Trulia Denver, Denver, CO Tue Jan 29, 2013

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Maria Cipoll…, Agent, Coral Springs, FL
Tue Jan 29, 2013
Mortgage rates historically low and lack of inventory of properties are motivating more potential buyers to getting off the fence and acting before prices go higher, which will help boost demand even further. Denver is also the second most populous county in Colorado, which ranks at the 16th most populous US metropolitan area.

Best of Luck,

Maria Cipollone

Century 21 Tenace
3 votes
Dane Robinson, Agent, Centennial, CO
Thu May 8, 2014
Over 300 days of sunshine a year and only 45 min away from the nearest ski lift....the secret is out!
1 vote
Yolanda Vare…, Agent, Denver, CO
Fri Feb 1, 2013
It's all based on supply and demand. Low inventory, more buyers on the market to buy, prices go up. Right now many homeowners that were foreclosed a few years ago are back on the market and ready to buy, plenty more coming so unless the inventory on houses for sell increases soon the prices will continue to rise. If you want to buy the sooner the better and be expecting a biding war. Partner yourself with a good Realtor, now better than ever professional help is required. You can only win!
1 vote
David Cox, Agent, Denver, CO
Tue Jan 29, 2013
Let me voice my opinion, for what it's worth:

Let's see, Denver never really had the steep run-up in values, experienced by much of the country in the early and middle 2000's.

Why? We were tech heavy in the 1990's. When the .com's fell off the cliff in 2000, many of our good jobs went with them. We started our recession in early 2001 and never really recovered.

Remember how we led the nation in foreclosures for much of 2006-2010? That was a result of lenders and builders trying to keep their volume up and ride-out the downturn with exotic loans made in 2001-2006. Those loans came due 3-5 years later. People that were betting on appreciation to bail them out paid a heavy price through foreclosure. Then, add insult to injury, 2008-2009 became our double dip, while the rest of the country was seeing this major recession for the first time.

Now here we are, with huge pent-up demand (think 10 years worth), low relative prices (about even with the 2005-2006 highs, when we were just bumping along the bottom 3%-5% appreciation), historically low interest rates (people are finally beginning to understand these rates can't last forever), with most homeowners who bought after 1998 without enough equity to come-up with a new 20% down payment after the cost of sale from their present home and…

Well, you get the idea, the perfect storm; lots of Buyers, no inventory and a crazy feeding frenzy.

Of course it doesn’t hurt that we’re still an Oil Patch State, albeit a minor one. If you haven’t noticed, the oil industry is doing just fine, thank you very much.

At least that's my story, I'd love to hear yours.

Dave Cox, GRI, CNE

P.S. Of course, I heard Rush said it was a Democrat conspiracy, so what do I know…
1 vote
Benjamin Ber…, Agent, Denver, CO
Tue Jan 29, 2013
Great question, I believe that there are a many factors involved here, including the fact that the "strong seller's market" only applies to a certain segment of the market, homes priced under $500,000.
Based on that, I see the biggest factor as the shortage of new rental properties (availability) vs. the increase in demand (population increase in Denver). This is pushing up the average rents over 10% annually for the last two years. That combined with what's occurring nationally, historically low interest rates. The gap between the cost to rent vs. the cost to buy is widening as interest rates keep going to new lows. As people started learning that they could save more money through buying a home instead of renting, it brings us to the 3rd aspect of this formula, the one that drives the capitalist system (supply vs. demand). Since the 3rd week of February last year our market has seen the supply of homes drop at an incredible rate, by late October we had about 70% less available homes than we had in February.

There’s another aspect to this formula. As you head down in price from $500K you see increased demand, and therefore increased price compared to last year. As I see things, there are about 7 buyers for every home under $500K, 15 buyers for every home under $250K, and almost 30 buyers for everything under $100K. The reason for such high action at the lower price points has to do with investors jumping in the fray with the first time buyers moving out of the expensive rentals. With the rental market being on fire and interest rates hovering around 0%, people with cash (who think they can make some quick cash) are taking it out of the bank and putting it into real estate.

Luckily, for the owner occupant buyers, most of the foreclosure properties have a period where investors are prohibited from making an offer. This is making foreclosures much more attractive for owner occupants and helping them find a place before the frenzy of investors can get in. I’m putting more buyers into bank owned properties every year and really love the opportunity that they get from this 7-15 day period. It also makes it almost impossible to find anything in the single family detached category for investors that will make them good money. I’m staying with higher price points and multi-units with my investors.

Thanks for reading my post, and please feel free to contact me with any questions or concerns.

Ben Berman
1 vote
Tiffany Phil…, Agent, Elizabeth, CO
Tue Jan 29, 2013
Denver became a strong sellers market because we have never had a huge explosion of growth like other areas; Florida, Arizona and we don't rely on just one major industry like, many areas on both coasts. Not having a huge growth explosion has afforded us to not have then the dip in our market keeping us on an even keil. Also, there are so many great agents opinion!
1 vote
Josh Perkins, Agent, Castle Rock, CO
Wed Feb 12, 2014
It's all about inventory, supply and demand. Low inventory, coupled with High Demand means one of the hottest markets in the United States. It's a strong market, and it should remain strong for at least the next 5 years due to the fact that the Denver job market is strong and growing, and there are a lot of people moving in to Denver from suburbia as well as other states like California.
0 votes
Robert McGui…, Agent, Denver, CO
Fri Feb 22, 2013
Trulia Denver,

During the crash of the economy, many homes lost value and many sellers were suddenly under water with their mortgages. At the same time, the banks stopped releasing foreclosed homes at the previous rate. Thus, the inventory became very low and it became a supply and demand situation favoring the sellers. We now have pre-qualified home buyers and a veritable plethora of investors coming the market for homes. There are now multiple offers on homes at all price ranges when they are in good condition and priced correctly. Plus, most sellers, who are now in a good position to sell still have not gotten the memo or they are afraid to make a move.

Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
0 votes
Sarah Grimm, , 80129
Sun Feb 17, 2013
There are lots of factors contributing to our strong Seller's market. Some include, low mortgage rates, a recovering national economy, increased Buyer confidence. However, as many have said in previous posts the largest contributing factor is inventory. In fact from there are 32% less homes on the market in January 2013 than there were in January 2012. This has resulted in a nearly 20% rise in prices during the same period.
0 votes
Lake Bishop, Agent, Denver, CO
Wed Jan 30, 2013
Some positive economic signs have had people loosening there purse stings. Right now is one of the best times to buy homes as the prices have not risen a lot and there are still some deals out there.
0 votes
Julie Montgo…, , 80238
Wed Jan 30, 2013
Very simple ... supply and demand. Many buyers that have been sitting on the sidelines the last few years are jumping back in due to low interest rates and "lower" prices. There are still sellers out there who can't sell because they are upside down on their homes (they owe more than the house is worth), but prices increased dramatically in many areas in 2012, and this year, from what I've experienced to date, could be even stronger.

I don't know why sellers aren't getting the message ... it is a SUPER time to sell a home, at least in the Denver, CO, Metropolitan area. Julie Montgomery, RE/MAX Masters, Inc., Greenwood Village, CO
0 votes
Jon Roberts, Agent, Denver, CO
Tue Jan 29, 2013
Lots of reasons. The biggest in my opinion: Low Inventory. There are theories I have as to why inventory is low, but won't get into that here. Fact is: Inventory in Denver is about 60% what it was a year ago, even less in the highest demand areas. That is backed by steady Buyer Demand. That was noted below in that many people choose to move here, often without jobs, to gain access to the very high quality of life. Couple that with Low Interest Rates. Denver is benefiting greatly there from from local strength and national weakness. To some degree, it's a perfect storm right now in Denver.
0 votes
Jeff Molenda, Agent, Centennial, CO
Tue Jan 29, 2013
Low inventory and low interest rates.
0 votes
Blue Sky Home…, Agent, Littleton, CO
Tue Jan 29, 2013
It's interesting. I think Denver is a pl e where people move to even without a job so there is always a demand here. That and a good rental market people are either upgrading their homes or hanging on. So inventory is low. I would say there is 5-10 buyers or more per active listing out there. Depending on location. Great time to sell. Check us out. We love to talk real estate.
0 votes
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