DENVER (KDVR) — The problem with moving to a desirable location is that everyone else wants to move there, too. In Colorado’s case, so many have moved that demand has made it one of the United States’ most expensive housing markets.
The Denver metro housing market continues to break records, but the Colorado Realtors Association says it isn’t a supply issue. In a release, spokespeople put the blame for high prices and low inventory squarely on homebuyers rather than flagging homebuilding.
“In spite of all the reporting of low active inventory numbers, the Fort Collins market is selling more homes each month than in each of the past two years,” said realtor Chris Hardy. “Nearly every home that comes on the market is sold in the same month and there isn’t much left to choose from. As I heard one mortgage lender say the other day, ‘We don’t have a supply problem. We have a demand problem.'”
People packed into Colorado at record rates and apartment-dwellers sought more square footage during the COVID-19 pandemic. As a result, Denver metro prices that had already been climbing have reached their highest points yet.
Colorado Realtors Association data shows a median single family home price of $573,500 – the highest point yet in a monthly cost series that has gone up 23% since last June.
According to the National Association of Realtors, this puts the Denver-Lakewood-Aurora area in the top 15 most expensive housing markets in the country.
“While new listings have remained stable in comparison to 2020, the real culprit is the demand of buyers ready to pounce when a new property comes to market,” said Glenwood Springs-area REALTOR® Erin Bassett.
Indeed, the amount of money bid over asking price in the Denver metro area is at record levels too.
Denver metro home sellers get an average 105.4% of asking price – about $31,000 of May’s median price.
Usually, this ratio goes up and down. Coloradans pay over asking price in summer months and a little less in the winter months when the market is slower.
Since last May, buyers have paid more than asking price every single month – a sign that they’re willing to pay whatever it takes to have a home in the Denver metro.
Not only are they willing to pay tens of thousands over ever climbing asking prices, but buyers are also snatching up whatever homes they can find in days.
Single family homes selling in the Denver metro area took an average 11 days to sell – another record low down from an entire year’s worth of record lows.
Together, the wild demand for Colorado homes has pushed housing affordability through the floor.
The Denver metro area’s housing affordability index has reached the lowest point in its 21st century history at 68.
Housing affordability index measures several factors – a region’s median price, interest rates and median household income.
The index itself is a percentage. May 2021’s index of 68 means the median household income is only 68% of what it takes to qualify for the median-priced single-family home.
According to National Association of Realtors data, there are only 14 metro areas in the United States where a potential homebuyer needs to make at least six figures a year to qualify for a home.
The Denver metro is now one of them. Depending on the down payment, it takes a homebuyer $90,000 – $106,000 to qualify for the median-priced home along the Front Range.