According to NAR’s Chief Economist, Lawrence Yun, the majority of home sales in Colorado last month were above list price (map below). Not much of a surprise to many brokers working with buyers right now. The market is full of multiple offers, above list, appraisal waivers, etc.
Lon Welsh, First Alliance Co-Founder and President of Your Castle Real Estate, wanted to dig a little deeper into 1Q data to determine the variation across different neighborhoods. He developed maps to show which Denver neighborhoods had the most homes selling above list price during 1Q 2021.
Cherry Hills
Probably as you’d expect, very expensive areas like Cherry Hills had few that sold at a premium.
Green = under 25% of the sales were at a premium.
Red = 75% or more sold at a premium.
Downtown Denver
Also, downtown has had less interest than you’d historically expect, so there were few bidding wars there.
Green = under 25% of the sales were at a premium.
Red = 75% or more sold at a premium.
Northeast Aurora
On the other hand, the entry-level priced neighborhoods with less inventory resulted in a lot of price push competition. Here’s northeast Aurora as an example.
Green = under 25% of the sales were at a premium.
Red = 75% or more sold at a premium.
The Real Estate Market Will Improve
We anticipate the low inventory situation will improve by mid to late 3Q21. That should greatly reduce the number of bidding wars, and make it easier for buyers (especially first-time buyers). There are three drivers for this:
As mortgage interest rates have increased since early January, the number of people applying to get a mortgage has been declining. This will reduce demand a little.
We’re hearing that many potential sellers didn’t want strangers walking thru their homes until they received their COVID vaccine. They didn’t feel safe showing their home. As more people are vaccinated, this will enable some of the deferred sellers to come to the market.
Lower-income households were much more adversely impacted by the recession than higher-income households. It’s hard to be confident to sell your small home to trade up to a larger home if you are worried about losing your job.
Many first-time trade-up sellers deferred their plans until they had more economic certainty. The stimulus and recent improvements in the economy (and consumer confidence) will encourage many of these people to finally trade up. That would increase inventory at the lower price levels.