I hope all is well with you and that you’re staying healthy and safe this holiday season. Last quarter I was a little behind in sending out my newsletter (due to a broken Collar Bone), but just as the year is coming to an end, I am also getting back on track. It’s probably safe to say we’re all ready to put 2020 behind us and be encouraged by renewed optimism and a positive rebound in 2021.
Q4 2020 Market Insights
The way we gather completely changed over the last 9 months but one thing remains the same, community is essential to healing and thriving. To persevere in 2020, the real estate industry was nimble, Realtors kept people connected with technology and shared a newfound appreciation for timely data. I am excited and optimistic for new visions and fresh ideas that will once again safely connect people to the places and spaces that make our city so unique.
November saw the lowest number of recorded active listings since record-keeping started in 2010 and this trend continued into December. Low-interest rates combined with transitions to working-from-home spurred a boom in home buying. The market continues to move quickly and the typical number of days on market in Denver is around 22 days for the metro area, down ~32% YoY.
Active listings for both attached and detached single-family homes came in at 3,415, surpassing the previous low set in December 2017 of 3,854. There was additionally a record-high for November average close price for combined single-family detached and attached properties, and detached single-family homes at $549,756 and $615,766 respectively. The previous record for combined single-family detached and attached properties was in 2019 at $486,012.
Denver isn’t alone in experiencing an unprecedented real estate market. According to the National Association of Realtors, home sales nationally will reach 5.52 million in 2020, the highest annual mark since 2006, with the median home price setting a record high of $293,000.
Rental Market Insight
Apartment rental prices continue to slip in downtown Denver but demand for single family rental homes, townhomes, and private condominiums in smaller complexes surrounding downtown has increased as renters look for more space (between people and walls). Historically the winter months favor tenants with better pricing and negotiating opportunities, combine that with a time where most apartment buildings are offering concessions of up to 2 months free rent and you can see why it might be a good time to explore rental options.
A Note on Rates
Low rates will continue to be the headline story going into 2021 as the Federal Reserve capitalizes on the tools at their disposal, such as buying longer-term government bonds while selling short-term, with the aim of influencing longer-term rates. Also, as the largest purchaser of mortgage-backed securities, the Federal Reserve is buying an increasing amount of 1.5 MBS Coupons. Add this to their commitment to continue their monthly purchase of at least $80 billion in Treasury securities and $40 billion in agency mortgage-backed securities; you have a powerful force to keep rates low.
Rates are also impacted by the uncertainty of our economic strength. While there was a temporary pop with good news, rates will remain low as COVID cases continue to surge and states struggle with containment. A vaccine will need to be made available to the greater population combined with two quarters of economic growth and recovery before higher rates can be expected to take hold.
Q4 2020 Local Real Estate Headlines
I am always happy to help with your real estate needs and look forward to continue working together in 2021. I am grateful for your business and thankful for your referrals.
Wishing you and yours a very happy and healthy holiday season. Cheers to the New Year and new beginnings!