Home out of Range Part III: Fewer homes selling for cash

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DENVER (KDVR) — Colorado homes are as expensive as they have ever been, the inventory is as low as its ever been, and homes are selling as quickly as they have ever sold.

Predictably, fewer buyers can afford to pay in cash — though the pandemic crunch seems to have kicked that number up.

It isn’t just prices that have skyrocketed in Colorado. Buyers aren’t only paying more per home. They’re also paying, on average, a bigger share of those rapidly rising asking prices.

The Denver Metro Association of Realtors tracked the monthly close-to-list ratio in the Denver metro for the last 10 years. This metric tells the percentage of asking price, on average, buyers end up paying.

In January 2011, buyers paid an average 3.8% less than the asking price. Given housing prices at the time, somewhere between $5,000 and $10,000 less.

As competition between buyers got fiercer, they paid bigger shares of the asking price. Since the pandemic began, buyers have paid more than asking price every single month — the first ever such run of high-paying months.

In March 2020, buyers paid on average about $1,000 less than the asking price for a Denver metro home. In March 2021, after a year of pandemic, buyers paid an average $19,000 over the asking price for a Denver metro home.

As a result, fewer and fewer buyers chose cash until the scramble for Colorado housing in the pandemic.

In March 2021, only 17% of single family homes sold in the Denver metro were cash sales.

This caps a long downward trend. In January 2011, 27% of homes sold for cash. Since then, the yearly average has gone own one or two percentage points every year before bottoming out at 10% last April.

In the pandemic home-buying frenzy, the percentage of homes selling for cash went up most months, reaching a high of 18% in February 2021 — the highest percentage of cash sales in three years.

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