Denver Real Estate MLS Market Stats- December 2021 ⋆ Denver Investment Real Estate

The Denver MLS trends data for December and the year-end are now out. While the trends are similar to what we’ve been seeing, I want to highlight just how lacking the inventory is. Before Covid in December 2019, there were 5050 active properties, which was really low at the time. At the end of December 2021, however, there were only 1475 active properties. Supply and demand is the most important metric to dictate what the market is doing, which is why prices are going up.

Colorado Springs and Denver December Update

Three Learning Options!

Listen to the podcast “#340: Denver Real Estate MLS Market Stats- December 2021” 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.

Another factor we’re seeing now is that interest rates are going up faster than expected. While this may make some people hesitant to buy, Lon Walsh used a spreadsheet to lay out why it still makes sense. If you buy a $600K property in the Denver metro area now, your interest rate will be around 3.8%, making your monthly payment $2800. If you were to wait 12 months, there will likely be around 7% price appreciation and a .7% increase in interest rates. This means you’ll have a 4.5% interest rate and pay $3250 per month, a 16% increase over what you’d pay now.

My prediction for 2022: prices will go up; rents will go up; interest rates will go up.

December 2021 Denver Market Stats with Ideas and Observations

Listing Count:

Total home + condo, 1475 active listings on 1/1/22.
This is -34% from Nov ’21 (that’s more than the 15% you’d expect with seasonality)
Down -42% from end of year ’20.
Pre-COVID at end of 2019, we had 5,050 active, and we thought that was really low (at the time)
Root cause is we only had 2,650 new listings in Dec ’21 vs. 3,050 in Dec ’20.
Condo inventory had more reduction (58%) than single family (26%) but both were dramatic.
Historically, we start to see an uptick in listings in mid-January; let’s hope that happens this year.
The average number of listings this time of year is 12,600. We’re at 10% of normal inventory. Gas tank is empty.

Closed Units

Dec ’21 was off 14% from Dec ’20. Lack of inventory was likely the driver for most/all of this.
There was a 15% decline from Nov ’20, which is a normal seasonality trend
For the entire year, we closed 63,700 units, just barely above 63,500 in 2020. It’s a record!
Home sold units down -2%
Condo sold units up +6%
I’d be surprised if we saw any growth in closed units in 2022. With ultra-low inventory and higher rates, I bet we see the number of ’22 closed units shrink 5%.

Showing Traffic

Dec 2021 showing traffic was consistent with patterns we have seen all year.
Expect a surge in showings/active listing to start around mid-January.

Pending

We ended the year at 3,320 vs. 3,450 for year end 2020.
Expect closing count in Jan ’22 to be down 3-5% +/- from Jan ’21.
That year over year decline could persist thru all of ’22.

Price

About the same in Dec ’21 as Nov ’21 (normal trend).
Up 16% from Dec ’20 (about the same as we have seen thru most of 2021).
Homes and condos had similar rates of annual appreciation.
The overall average for the entire year was a 17% price increase year over year. That’s on the heels of a 16% total increase from 2019 to 2020.
I wouldn’t think we could have a third year of appreciation over 10%, but with the very strong demand (as evidenced by large number of buyers applying for new mortgages) and the very limited inventory – prices can only go up. Hopefully the increase in mortgage rates slows things down a bit.

Discounts

The average property sold at a 1.5% premium to ask in Dec’21. In Dec ’20, that was 0.4% premium.
Keep in mind MOST homes sell at/near ask price and not a >5% premium.
The average premium for all of 2021 was 3.4% over ask price. That compares to 0.9% premium in 2020.