Snow wasn’t the only thing missing in metro Denver in November. Home listings dried up, with the inventory of available properties down by a third from October. The shortage is so severe that single-family home prices revisited record highs reached this summer, according to a monthly update from the Denver Metro Association of Realtors.
There were 1,444single-family homes for sale at the end of November, down 38.4% from October and 17.7% from a year earlier. The supply of condos and townhomes fell 21.6% month-over-month and 51.6% on the year to 804 listings. Normally, the inventory of homes for sale drops 11.4% between October and November, and last month’s decline was one for the record books, DMAR said.
November’s inventory was also a record low for the month, according to the report. If December sees a 25% drop in inventory from November, metro Denver could end the year with a paltry 1,686 active properties, noted Andrew Abrams, chairman of the DMAR Market Trends Committee, which compiles the monthly report.
“That is drastically lower than the end of 2020 and could lead to the most competitive year yet,” he said in comments included with the report, adding that 2021 homes sales are on track to surpass annual sales seen in any year in the past five years.
A nearly 30% drop in new listings compared to October contributed to the inventory shortages, but new listings last month were on par with November 2020. Demand remains strong, with 4,392 closings but only 3,741 new listings hitting the market. Closings were down 10.4% from October, but that appears to be more about a lack of homes to buy. Half of new listings went under contract in five days or less after hitting the market.
The lack of supply is once again putting upward pressure on home prices, which had shown signs of leveling off. The median price of a single-family home sold in November rose 2.7% from October to $600,000, tieing the record high reached in June. The median sales price for condos and townhomes did reach a record $390,000 in November, up 4% from October. Median single-family home prices are up 17.6% on the year, while condo prices are up 16.4%.
A separate analysis from Zillow may explain what is going on. It estimates that new home construction nationally fell short of population growth by 1.35 million homes between 2008 and 2020 in the 35 largest metro areas. In metro Denver, builders undersupplied the market by 64,200 homes, helping explain inventory shortages and skyrocketing home price appreciation.
“Builders in recent months have put the pedal to the metal to get new homes up and meet a rush of demand, and we just saw the first full year of above-average construction since the mid-2000s housing crash,” said Zillow senior economist Jeff Tucker in the report. “This isn’t a new boom cycle of new construction so much as it’s an attempt to get even from the last bust. There is still a long way to go to catch up from more than a decade of slow construction, and some markets have longer to go than others.”
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