Home and condo sales in metro Denver dropped by nearly a fifth in August from a record-setting July, but not because buyers pulled back. They had half as many homes and a fifth fewer condos and townhomes to choose from this year than a year ago.
Even with the big monthly decline in closings, the 5,595 homes sold this August was an all-time record for the month in metro Denver, according to the latest Market Trends Report from the Denver Metro Association of Realtors.
"If there were more, we would have sold more," Jill Schafer, chairwoman of the DMAR Market Trends Committee and Denver-area Realtor said in comments accompanying the report. "Unfortunately, there weren't a lot more homes put up for sale in August. The active listings at month-end showed how desperate things looked."
There were 5,496 homes and condos available for sale at the end of August. That was down 14.8% from an already tight July and 41.2% below the inventory available in August 2019. When it came to single-family homes, only half as many were available this August compared to August 2019. For perspective, the active inventory of homes for sale in August since 1985 has averaged 16,550 and the supply of listings almost always rises between July and August.
The imbalance between supply and demand continued to push prices higher. The median price of a home sold in August reached $510,000, up 2% from July and up 12.1% over the past year. The average price of a home sold in metro Denver sold crossed the $600,000 threshold for the first time, reaching $606,330.
The condo market wasn't as heated. The median price of a condo sold in August was $325,000, a 2.4% drop from July and a more modest 3.7% annual gain from August 2019. One possible explanation could be related to COVID-19, in that urban condos have lost their allure as buyers seek properties with more space in less dense areas.
The lack of inventory appears to be contributing to a "vicious circle" the region suffered a few years ago, Schafer said. With inventory tight, sellers simply stayed put.
"Many homeowners say they would like to move, but the inventory is so low they don't see anything they would like to buy," Schafer said, adding their failure to list only exacerbates the problem.
The federal response to the pandemic could also be introducing distortions into the housing market. Record-low mortgage rates have improved affordability and left younger buyers anxious to lock in a home. At the same time, owners who can't afford their mortgages, say because of a job loss, have up to a year to skip payments, reducing the pressure on them to list their properties.
About 7.2% of all mortgages nationally are in a forbearance agreement, according to the Mortgage Bankers Association.
