Denver housing market suffers dramatic swing in 2018

For metro Denver’s housing market, 2018 will go down as a tale of fire and ice, where a very hot first half of the year turned into a much colder second half that didn’t show signs of letting up as the year came to an end.

Home and condo sales in metro Denver dropped 17.8 percent in December from November to 3,396. Comparing December 2018 to December 2017, home sales are down by 23 percent, according to the market trends report from the Denver Metro Association of Realtors.

Measured across the entire year, home sales in metro Denver are down 5.5 percent in 2018 versus 2017 and came in at their lowest volume since 2014. Higher prices, however, allowed the market to hit a record sales volume of $26.5 billion, which is 2.36 percent above the volume sold in 2017, according to the DMAR report.

“Sellers celebrated in the first half of the year with a crazy blur of multiple offers and fast sales,” said Jill Schafer, head of the DMAR market trends committee and a local Realtor, in a release. “It was buyers’ turn to celebrate when the housing inventory jumped up in May and June, causing a market adjustment in the second half of the year and finally giving them some choices.”

As sales fell, properties lingered longer on the market and more unsold homes piled up from what were record low inventory levels. There were 5,577 unsold homes on the market in December, up 44.7 percent from the record low set a year earlier. Compared to November, however, the inventory was down 25.9 percent, as sellers took listings off the market for the holidays. Single-family listings spent 41 days on market on average, while condo listings spent 35 days.

Home sellers in the second half of the year had to start making price reductions, something new to them. Despite that, home prices found a way to keep rising, Schafer said.

The median price of a single-family home sold in December came in at $430,000, which was up only 3.3 percent from December 2017. The median price of a condo sold was $298,225, which is up 4.5 percent from December 2017.

Measured across the entire year, the average price of a single-family home sold was $522,839, up 8.05 percent from 2017. The average price of a condo sold increased 9.82 percent to $351,677. Those gains were supported by a continued influx of people to the state and more millennials buying homes, Schafer said.

Higher mortgage rates, which make homes less affordable, contributed to slower housing activity nationally, not just in metro Denver, during the second half of the year. Although mortgage rates moved lower last month and ended the year at September levels, it didn’t halt a continued slide in applications, according to an update from the Mortgage Bankers Association.

“Even with lower borrowing costs, both purchase and refinance applications decreased over the two-week holiday period, as both conventional and government applications dropped,” said Joel Kan, an executive with the MBA in the update.

Kan suggests that the government shutdown may also be impacting buyers using Federal Housing Administration loans, which come with lower down payments. They now face lengthier processing times, and that could be pushing some borrowers to the sidelines.