Upper Market Moves into Seller’s Territory
The National Association of Realtors has long held that six months of inventory equates to a balanced market. Months of inventory, or sometimes called “absorption rate”, is the number of months it would take to sell all of the currently listed homes if they sold at the same rate at which they sold during the previous 12 months. Our most recent analysis of the central Denver market shows that the upper third of our market, homes over $615,000, which was hovering last January in balanced territory at around 5.62 months, has fallen to 3.75 months — well below NAR’s standard of balance at six months.
Market Tightens Across All Price Points
The lower (homes under $415,000) and middle (homes between $415,000 and $615,000) markets have been in seller territory for a couple of years and have tightened even more since the previous January; however, not as much on a real or percentage basis as the upper market. Regardless, the chemistry of real estate transactions is not that different whether you have 2 months or 1 month of supply – it’s still a strong seller’s market!
Buyers Find Solace at The Very High End
We were curious to see how high in price you had to go to find a balanced market. At $1.8 million the market is back to equilibrium, which represents the top 4% of the market by price. As we move into the spring market, increasing demand will outpace increasing supply. We expect to see a drop in months of inventory even at the very, very high end.