Average Denver home prices hit a milestone in May, topping $400,000 for the first time in the city’s history.
That’s according to the latest REcolorado statistics, which show that average prices in the metro area rose 4% over the previous month, settling in at $407,662. The figure represents a 9% increase over average prices logged in May of 2015.
The statistics reflect a trend that has been ongoing for more than a year, with low inventory, favorable interest rates and a growing population fueling demand. Given the tight market, homes are selling quickly: spending an average of 24 days on the market and sparking buyers to often bid over the asking price.
“The fury of the market is coming together as we enter the prime selling season,” one broker recently told Denver Real Estate Watch. Buyers have reported offering as much as $40,000 above the listing price —and still being outbid.
Meanwhile, the share of listings returning to the market because the winning offer fell through was double the usual rate in April, according to the Denver Metro Association of Realtors (DMAR).
“You have this pushback on both sides,” DMAR committee chairman Anthony Rael told the Denver Post, noting that tensions can run high under these circumstances. Sellers are finding that buyers are making high offers they can’t really afford and then later backing out of the deal. Meanwhile, buyers are increasingly frustrated with sellers’ demands, including requests to waive inspections or appraisal contingencies, important safeguards for those acquiring a new property.
The moral of the story for buyers: It may not be futile to put in an offer that’s likely to come in second. That offer may eventually win out if the first bid falls through.
Rael is encouraging both sides to “be more civil and flexible. A seller who’s happy with the initial listing price should avoid squeezing buyers for every penny — especially when the appraisal can’t support the offer,” Rael told the Post. “…Likewise, buyers should avoid getting caught up in the heat of the moment and making offers they can’t follow through on” when bidding on homes they are going to have second thoughts about.