When demand outstrips supply, buyers compete, driving prices up.
That plays out in the latest housing figures in Denver. Inventory was down 2.15 percent from January to February and down 19.64 percent over the year, to 4,835 active listings, according to the the Denver Metro Association of Realtors. To put that number of active listings at the end of this February into context, consider that for any February between 1985 and 2019, the average active listing was 13,780.
The Denver Metro Association of Realtors’s latest market report puts the median price of a home last month at $430,000, up 2.38 percent from the previous month and up 7.5 percent from February of 2019. That follows a more modest price increase of less than 1 percent between December and January.
Nicole Rueth, a member of the realtor group’s market trends committee, expected competition to be even fiercer this month. Tuesday, the Federal Reserve cut by a half percentage point its target for the federal funds rate to a range of 1 to 1.25 percent. That was the Fed’s response to fear about the impact on the economy of the coronavirus, and it should lower the cost of mortgages. That could bring more buyers to the market.
Rueth said she expected price wars in the spring and for inventory to be even lower when the next market report is calculated.
“‘Will the seller come out’ is a great question,” said Rueth, who also is a manager with The Rueth Team, a mortgage loan company in Denver.
Potential sellers might stay in their home for the same reasons that buyers will be looking: some of the mortgages they have will be cheaper, too. Rueth added homeowners have been holding onto their houses rather than selling them for other reasons, including inability to find a new house to move into that they can afford.
“Fewer homes to choose from pushes prices up in a community that already has an affordability issue, so now is the time to get homes listed and on the market,” said Jill Schafer, who chairs the realtor group’s market trends committee and is a Kentwood agent.