In its monthly market study, Denver Metro Association of Realtors (DMAR) reports that active inventory for residential properties dropped from 6,312 in October to 5,131 in November—an 18.71% decrease. That number represents a 7.80% decrease from November of 2016.
October’s inventory was already at a record low for that month. From 1985 to 2016, the average number of homes on the market in October was 16,306, more than twice this year’s number.
Part of the November drop can be attributed to seasonal trends. “This time of year brings the holiday rush and colder weather,” notes Steve Danyliw, chairman of the DMAR Market Trends Committee. “It also brings colder housing numbers. The amount of housing activity closely follows the weather. It’s simple: more people buy homes when it’s warm compared to when it’s cold.”
Still, many predict the tight inventory—a trend nationwide— will continue, even as the thermometer rises later in 2018.
In a recent blog post, Zillow’s Chief Economist Svenja Gudell, notes that housing inventory across the country is 12% lower than the same time last year. He believes that tight inventory “will remain a major concern in 2018.”
This presents particularly difficult problems for first-time buyers looking to enter the market.
“In most markets around the country,” writes Gudell, “inventory of homes for sale has become so tight that housing is now a game of musical chairs: Nobody wants to stand up from the home they’re currently living in and list if for sale, for fear they won’t be able to find another home to buy. This inventory crisis leaves few options for millennials, a huge generation just entering the market that genuinely wants to become homeowners, but can’t find anything to buy.”
Millennials are also struggling with affordability. While the average sold price for a home in Denver dropped 1.53% from October to November, it’s still 8.31% higher than November of 2016. The figure now sits at $433,848.
According to the Denver Post, affordable housing is a problem that is spreading to the suburbs as well.
“While much of the focus of affordable housing conversation has been on Denver…the issue is widespread,” notes the Post. “According to the Colorado Division of Housing, more than 272,000 low-income Coloradans are spending more than half their income on housing. And more than $102 million in state funding has gone into developing affordable housing since 2010.”
Cities currently planning low income housing projects include Westminster, Commerce City, Golden, Lakewood and Castle Rock. Meanwhile, “Englewood has been studying the idea of allowing accessory dwelling units – mother-in-law-style apartments or backyard garden cottages – to serve as compact homes for people.”
Danyliw warns that the inventory problem is unlikely to abate in the coming months. “History tells us that inventory will continue to decrease until sometime around February. We may be looking at more record lows.”