Homebuyers in metro Denver were not slowed by the pandemic in July as June’s record number of pending sales converted to an all-time high in the number of closings in any month on record, and the average single-family home price catapulted to over $600,000.
Metro Denver real estate posted a number of records in July even while the daily number of COVID-19 cases reached record daily levels in the U.S. Homebuyers were not slowed by the pandemic as June’s record number of pending sales converted to an all-time high in the number of closings in any one month. Nearly seven percent more properties closed in July than Denver area’s previous high in June 2017.
“We predicted the record home sales, but I don’t know anyone who predicted prices would jump up so much in one month,” stated Jill Schafer, Chair of the DMAR Market Trends Committee and Metro Denver REALTOR®.
Pent-up demand from the COVID-19 home-showing shutdown and the continued lack of choices forced homebuyers to bid against each other. Many sellers collected multiple offers at or above asking price. That competition catapulted the single-family home price average up to a record $601,863, which is 7.68 percent higher than June and 9.92 percent higher than July 2019.
According to Schafer, the lack of housing inventory puts the advantage in the sellers’ hands in all price ranges except for condos priced above $1 million. Even though the number of closed sales of luxury condos was up 50 percent month over month, it is still the softest segment of the market and homebuyers have the upper hand in negotiating.
The number of pending home sales in the entire residential market in July was down slightly from June’s record but still 27.07 percent higher than July 2019. “This should translate into another big closing month in August,” adds Schafer.
Denver wasn’t alone in this real estate mania. Homeownership nationwide jumped to an almost 12-year high and refinance activity exploded up 122 percent year over year in mid-July. This happened despite the economy shrinking by 9.5 percent in the second quarter of the year from the previous one, and a record 70-year drop in the gross domestic product.
“While we are all wearing masks, social distancing and washing our hands to try and reduce the number of cases of COVID-19, none of those things appear to be slowing the Denver metro real estate market and it doesn’t look like you’ll see activity or prices coming down soon,” said Schafer. “It will be interesting to see if our usual fall slowdown happens this year, or at all. We will be watching.”
Luxury Market Report
Our monthly report also includes statistics and analyses in its supplemental “Luxury Market Report” (properties sold for $1 million or greater), “Signature Market Report” (properties sold between $750,000 and $999,999), “Premier Market Report” (properties sold between $500,000 and $749,999), and “Classic Market Report” (properties sold between $300,000 and $499,999). In July 2020, 388 homes sold and closed for $1 million or greater, up 46.97 percent month over month and 54.58 percent year over year. The closed dollar volume in the luxury segment in July was $610 million, up 57.64 percent month over month and 62.79 percent year over year.
The highest-priced single-family home that sold in July was $5,985,000, representing five bedrooms, nine bathrooms and 9,720 above ground square feet in Cherry Hills Village. The highest-priced condo sale was $2,650,000 representing four bedrooms, seven bathrooms and 5,263 above ground square feet in Denver. The REALTORS® representing the buyers and sellers in both transactions are DMAR members.
“Throughout July, the market did not seem to slow down,” stated Andrew Abrams, member of the DMAR Market Trends Committee and Metro Denver REALTOR®. “Having said that, in the luxury housing market, there were two different perspectives depending on if you had single-family or condo homes.”
The single-family Luxury Market, homes priced $1 million or greater, had one of its strongest months in almost every statistical category and July 2020 was completely different from July 2019. There was a 53.45 percent increase in new listings compared to last year. The number of pending transactions jumped 104.62 percent from 195 last year to 399 this year. The amount of closed deals in July increased 61.06 percent and both the median and average days in MLS decreased from the previous year. “Clearly, the single-family luxury market in July was trying to make up for lost time from the economic shutdown this past spring,” commented Abrams.
While the luxury condo market had a relatively strong month compared to that of the previous year, it is clear that the demand for condos was not nearly as strong as the demand for single-family homes.
According to Abrams, people have spent more time in their homes than they are accustomed to and there is a growing trend of wanting more space, not just in terms of a house but a yard as well. This is reflected in a few key categories. The number of new listings for luxury condos more than doubled from the previous year, jumping from 33 new listings last year to 68 in July. While pending sales did increase 66.67 percent, that is not a higher number than the number of new listings, indicating that supply is finally starting to outpace demand in this price segment. Furthermore, the number of luxury condo sales went down from the previous year.
“The difference between the single-family homes and condos in the luxury market certainly makes sense considering the current situation,” he adds. “While being more isolated and having less activities to do, people generally want more space.” The months of inventory for luxury single-family homes indicates a seller’s market at 2.56 months of inventory; while the luxury condo segment is a buyer’s market with 6.62 months of inventory. “Until we have a solution for COVID-19, I can see these trends continuing,” Abrams stated.