Business

Why the Average Home Price in Denver Blew Past $625K

This three-bedroom, two-bath property at 2637 Garfield Street is currently listed at $625,000 — just below the newly established average price for a detached house in Denver.
This three-bedroom, two-bath property at 2637 Garfield Street is currently listed at $625,000 — just below the newly established average price for a detached house in Denver. Google Maps
Another month, another record for the Denver housing market, which remains red-hot despite the COVID-19 crisis. According to the November market-trends report from the Denver Metro Association of Realtors, the average closing price for a detached home in the Mile High now sits at more than $625,000, surpassing the old mark by nearly $20,000.

Why the continuing rise? Quite simply, demand continues to outstrip supply by a very wide margin. The number of active listings for homes at the end of October was less than 50 percent the total for sale a year earlier.

In August, the average home price in the Mile High City surpassed $600,000 for the first time, landing at $606,330. And while that mark wasn't quite eclipsed in September, when the average price was $599,418, DMAR's October report still contended that house hunters were facing "the toughest market to buy a home in metro Denver's history."

The situation hasn't softened since then. DMAR attributes the comparatively small number of homes available to the pandemic. Because many potential sellers don't want to go through the hassle of relocating right now, those who don't have to put their property on the block often aren't doing so — and as a result, stock is dwindling quickly.

There were 4,821 active listings at the beginning of October, which was described as a historic low, but just 2,643 by month's end. That was down 13.09 percent from the number available at the end of September, and 54.77 percent lower than the total for sale in October 2019.

These circumstances created upward pressure on prices, resulting in the average closing price for a house reaching $625,100 in October — an increase of nearly $100,000 over the previous twelve months. The climb is captured visually in this graphic:

click to enlarge A graphic showing the growth in the average closing price for homes over the past year. - DMAREALTORS.COM
A graphic showing the growth in the average closing price for homes over the past year.
The number of new listings in October seems to offer some good news for buyers. While that number — 4,224 — was slightly down from the 4,435 added in September, it represented an 11.78 percent increase over the number added in October 2019.

In a statement, Andrew Abrams, the chair of DMAR's market-trends committee, acknowledges that "October continued to defy seasonality as new records were broken by both buyers and sellers. Sellers continued to have little competition as escalation clauses, appraisal gap waivers and 'as-is' offers were frequently used, while buyers had to fight hard, making concessions in all of the ways referenced above, to secure a place they could call home."

As a result, buyers are more likely to find themselves in bidding wars than they are to find bargains. And there's no sign that the situation will change anytime soon.

Click to read the Denver Metro Association of Realtors November 2020 market trends report.
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Michael Roberts has written for Westword since October 1990, serving stints as music editor and media columnist. He currently covers everything from breaking news and politics to sports and stories that defy categorization.
Contact: Michael Roberts