This month, we have a full team to discuss the residential market trends in Colorado for April 2022. Envision Advisors agents Jenny Bayless and Preston Newberry and lenders Joe Massey of Castle & Cooke Mortgage, and Travis Sperr of Renovo Financial joined me to discuss the trends. Watch the YouTube video or listen to the podcast to hear the full conversation.
- Listen to the podcast “#374: April 2022 Residential Roundtable Market Update” on the Denver Real Estate Investing Podcast
- Watch the YouTube video (at the bottom).
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
April 2022 Denver Market Stats with Ideas and Observations
- 3,200, up 24% from April ’21 (2,600 listings – all time low for April)
- Up 44% from March ’22
- That’s quite a bit more than the typical seasonal increase of 8.5%
- Oddly, the growth was all in homes; condo inventory declined
- Encouraging for buyers to see more inventory
- Over the last 35 years, we have had, on average, 14,600 listings in April. Keep in mind Denver’s population in that time was a lot less than today!
CLOSED UNIT COUNT
- 4,900, down 12% from April ‘21
- Jan-March ’22 were also down about 12% from same time in ‘21
- Consistent results for homes and condos
- I sent out a study a few days ago which looked at the last seven times where mortgages went up 1% in a short time. The average impact was a 12% decline in unit count in the next year. We seem to be tracking to that.
- $725K (!), up 17% from April ‘21
- UP 3.5% from March ‘22
- Homes and condos relatively consistent results (condos were up a little less)
- I sent out a study a few days ago which looked at the last seven times in the US when mortgages went up 1% in a short time. The average impact was a 2% increase in price the next year. We are NOT tracking to that yet, but I do anticipate price growth will slow down by late 3Q
- Many people, including “experts” in the media, expect prices to drop. There’s no evidence in the past 50 years of data showing that prices have ever dropped when there was low inventory.
- Denver’s had three years of price declines since 1971: 1985, 2008 and 2009. Each were buyer’s markets where there was lots of inventory and not many buyers. I don’t expect we’ll see price drops in this cycle.
- 8 days on average, down a bit from last month.
- I suspect this is going to be close the best month in this economic cycle; Days on Market (DOM) should start to gradually increase from here as the inventory finally starts to recover.
- The number of showings per active listing declined quite a lot between March and April ’22. It was also down from Feb to March
- The traffic is still historically very strong
- I suspect that the composite number of showings is about the same, but with more inventory, the showings / listing is down
- 6,900 in April ’22, +4% from April ‘21
- +14% from March ’22. About the historical increase for this time of year
- Year to date, we’ve had 20,600 new listings. That’s below each 2018, 2019, 2020, and 2021.
- While inventory is going up a little, it’s not going to go up too quickly.
- It took a lot of years to get into the low inventory state we’re in, and it’ll take several years to get closer to what we historically think of as “normal”
- 4,050 in April ’22, +2% from April ‘21
- This is the first increase YOY (year over year) we have seen in a few months
- I wonder if the rate increase headlines scared buyers that were on the sidelines to rush in and buy a home before the rates went up anymore? If that was part of the motivation, this mini-surge will be short-lived.
- It’s impressive that the increase in new listings was big enough to accommodate more homes going under contract and STILL increase the active inventory.
Source: The above executive summary is from Lon Welsh of Your Castle Real Estate.
When Should I Start to Worry?
Jenny asked a great question to the group. A lot of people are looking at the trends with concern, but we all agree it’s a good time to buy. What stats or trends would we need to see to start to worry?
Joe: Outbound migration. If a lot of people start to leave Denver and there’s net negative migration.
Travis: Inventory. While more inventory would be fantastic, too much inventory would mean there’s less competition and prices will go down.
Chris: While supply and demand is a great indicator, there’s no correlation between increased interest rates and buyer demand until interest rates hit 10%. At 10%, real estate becomes unaffordable and buyer demand goes down.
Preston: If lenders start loosening up guidelines way too quickly or too much. When things slow down, lenders need to make money, and if they start allowing people who are not as well-qualified to get approved for a loan, I would be worried.
Jenny: A collectively different mindset of living situations that leads to increased household size. If everyone starts house hacking or multiple families move into one home, it would take a lot of buyers or renters out of the market for an individual home. It also means home are not affordable.
Denver Housing Trends April 2022
Get Started Building Your Own Denver Rental Property Portfolio
If you want help investing in rental properties, reach out to us. We want to help you find the right strategy and property to fit your goals.
April 2022 Residential Roundtable Market Update
Podcast: Play in new window | Download (Duration: 33:49 — 38.7MB)
Subscribe: Google Podcasts | Spotify | Stitcher | Email | TuneIn | RSS | More