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How COVID-19 Explains Why Denver Condos Aren't Selling Like Houses

Denver's Lakehouse 17 complex, 4200 West 17th Avenue, includes luxury three-bedroom, two-bath units on sale for $1,712,500.
Denver's Lakehouse 17 complex, 4200 West 17th Avenue, includes luxury three-bedroom, two-bath units on sale for $1,712,500.
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According to the Denver Metro Association of Realtors, the average closing price for a detached home in the Denver area is now $625,100, a sky-high record — and the $393,733 average closing price for attached units such as condos is the highest ever in that category, too.

But Jim Smith of Golden Real Estate feels this last figure is a bit misleading. He points out that new listings for condos are popping up at an unprecedented pace, but such spaces aren't selling nearly as quickly as single-family homes — and he believes the reason has everything to do with COVID-19.

"The people living in high-rises and condos want elbow room," Smith notes. "They don't want to be mixing in elevators and lobbies with people who might have COVID-19 — and the fact that COVID-19 is accelerating now is probably going to increase the number of condo dwellers who are putting their places on the market."

However, he notes, condos "aren't selling like houses. They're sitting on the market" because buyers with the means to make purchases in large complexes, particularly in the luxury category, have the same concerns.

Smith is one of the housing market's most iconoclastic characters. Whereas most real estate pros avoid taking public political positions for fear of alienating potential customers, he pens a column called "Talking Turkey" that regularly attacks President Donald Trump. For years, such pieces appeared alongside Smith's home-sale analyses in YourHub, a branch of the Denver Post that relies on user-generated content — and while he's currently distributing "Talking Turkey" via an email list (contact Smith to subscribe), he continues to stir the pot. When Westword reached him this week, he was compiling a list of positive responses about his post-election takedown of Trump to send to a subscriber who supports the president.

Smith's real estate prognostications have been spot-on. This past spring, when some observers were predicting that the market would crater owing to the pandemic, he told us that because there was "an under-supply of homes" in the Denver area, "we're not going to have a crash, because there's too much demand and too little supply."

Things have changed since then, Smith points out.

"Let me address one misconception people have: They think people aren't putting their homes on the market," he says. "But in the latest DMAR report, there were a record number of new listings for October. So people are putting their homes on the market. The reason the inventory is low is that they're being snapped up in one to six days, and you can't increase inventory if they're selling that quickly. People aren't holding back from listing their homes. They realize it's a great time to sell, and the ones who price their house right are selling it immediately."

Condos are a different story. The DMAR survey shows 2,022 new attached-property listings for October, just a shade off the 2,027 the month before — and both figures represent a huge increase over the 1,657 new listings in this category a year earlier. But whereas there were fewer active listings for detached homes at the end of the month (2,643) than there were new listings over that span (4,224), that wasn't the case with condos. By the end of October, there were still 2,168 active listings, outdistancing new listings by more than 100.

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This disparity might suggest that many people currently living in luxury condos are ditching them to buy detached homes and thereby driving up prices in that category. But the truth is not that simple, Smith suggests.

"If they have a lot of their money in a million-dollar condo, they don't have that much equity," he argues. "The equity's in the condo, and they can't sell it. So they're not necessarily fueling this market."

Then again, some of these folks are so well off that they can purchase a new home even if they can't move their pricey condo right away — and they're able to beat the competition by paying for a detached property outright rather than going through the financing process. "There's a lot of cash out there," Smith says.

And the novel coronavirus is inspiring plenty of condo people to spend it.

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