It’s a seller’s market in the greater Denver housing market, where homeowners still call the shots while potential buyers from California hop over the Sierras into the Front Range.
Across the Mile High City, sellers still hold the advantage despite more homes for sale, with demand still outpacing supply, the Denver Post reported, citing Zillow’s Market Heat Index.
The index measures whether sellers or buyers dominate a given market, or if a market is “neutral,” indicating a balance between both sides.
After briefly touching neutral territory last fall, metropolitan Denver shifted back to a “strong seller’s” market this year with a heat index score of 71.7 last month.
“It’s all about supply and demand,” Orphe Divounguy, a senior economist with Zillow, told the Post. “Even if demand holds steady or falls slightly, a substantial decrease in supply causes the housing market to tighten, pushing prices higher.
“Similarly, higher incomes and wealth, which push demand higher, have the same impact on market tightness if supply doesn’t keep up.”
Sellers held their ground in greater Denver despite a 20.2 percent increase in the number of homes for sale and a 23.6 percent gain in new listings over the past year, with a Zillow Home Price Index just shy of $600,000.
Someone earning a typical salary in Denver would have to contribute 43 percent of their income to afford a typical home, assuming 20 percent down, Divounguy said. That restricts the pool of potential buyers.
New home construction in Colorado isn’t rising enough to meet demand, as it is in states like Texas and Florida, which are shifting more toward the neutral or buyer’s camp.
And metro Denver, despite its higher price point for homes, remains a draw for those relocating from California, which is even more supply-constrained and expensive.
At the same time, annual wages in metro Denver rose 13.5 percent through March, compared to a 4 percent gain in the U.S., Divounguy said. That was above the 2.6 percent gain in home prices.
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The average heat score for the U.S. is 60.3, which indicates a seller’s market. The three strongest seller’s markets, with scores above 100, are in New York: Rochester, Syracuse and Buffalo.
Other seller’s markets include Hartford, Conn.; Springfield, Mass.; Albany, New York; and Minneapolis and Milwaukee.
Eleven markets, primarily in Florida, have tipped to the buyer’s side, with supply outpacing demand. Among larger cities, Miami, New Orleans, Honolulu and Jacksonville, Fla., are buyer’s markets.
— Dana Bartholomew