The Denver MLS trends data for March 2022 is in, and a couple things stick out to us. Inventory went up 81%, which seems like a huge number, but low inventory means it was only about a 1K increase in homes. For context, we need about 10-12K in inventory for a balanced market. Interest rates continue to go up with no end in sight, which may push some buyers out of the market or into a different price pool. There are still so many buyers as a whole that it isn’t likely to affect housing prices.
Check out the podcast or YouTube video to hear the full conversation with Preston Newberry, Joe Massey, and me.
- Listen to the podcast “#367: Introducing Our New Residential Market Updates Roundtable for March 2022” 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.
Deals of the Month
To show our audience how we’re still getting great deals for our clients, Preston and Joe shared some recent transactions:
Pivoting to a Short Term Rental In Order to Cash Flow
Preston recently had a client who got some cash from a refinance and wanted a new primary residence he could Nomad. With prices going up and cashflow going decreasing, his client really wanted something that would not be negative cash flowing.
Although he never considered short term rentals before, it’s a great way to boost returns. Preston found a great property on the west side of town that was already set up as an Airbnb. They submitted a backup offer, and sure enough, the initial deal fell out of contract and they were able to close on the property.
While his client didn’t go into his property search expecting to operate a short term rental, he’s excited for the new adventure and the extra cash.
Writing a Creative Contract So Everyone Wins
Joe recently had a client who was looking at properties and found one with a lease already in place. The property had been on the market for 18 days, which is an eternity in today’s climate. The reason the property was sitting was due to the seller stipulating the home could only go to an investor because the lease in place had 120 left days on it. The price of the property was $480K and the rent was $1600 a month, meaning the property would be negative cash flowing.
The client had some flexibility, so he decided to get creative. He wrote the contract with a 60 day close and gave the tenants the max 59 day post occupancy. This gave everyone what they wanted: the seller got list price; the tenants got the full time left on their lease and already planned on moving; and Joe’s client now has a new home with a basement apartment he can rent out for better returns.
March 2022 Denver Market Stats with Ideas and Observations
- Up 16% from Mar ’21!
- Homes were up, condos were down
- Not in this report; I sent out a few days ago
- Still very strong, well above historical average
New listings in the month
- Up 6% from March ‘21
- Homes did a little better than condos, but both saw growth
Under contract count on month end
- -7% from last year
- Both homes and condos were down
- We can expect the number of units closed for the industry to be down in April ’22 vs April ‘21
- Down 16% from March ’21.
- Condos were down more than homes
- I don’t think the decline in April and May will be as bad as March
- Up 20%
- Homes and condos were similar
- With the declines in unit counts in April, May, I’d expect the pace of appreciation to slow down a bit in the 2Q
Average DOM Days on market
- Down from 19 to 11
- I bet we’re at/near the bottom and it’ll start to inch up from here
Average premium paid
- Increased from 4.1% in Mar ’21 to 6.7% in Mar ‘22
- I bet we’re at/near the top for that too; as sales volumes ease a bit and inventory goes up a little, it should take some of the heat out of the overbidding (e.g., 6 offers over ask instead of 10)
YTD (Jan – Mar)
- Off 12%
- I think this is partially lack of inventory, partially high prices, and the growing mortgage rates
New listings added
- -5% from ‘21
- I was glad to see the growth in March; impossible to know if that will continue or not
Source: The above executive summary is from Lon Welsh of Your Castle Real Estate.
Denver Housing Trends March 2022
Showings per Active Listing Trends for Denver
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