It’s no secret that purchasing a home in Colorado has become a challenge for anyone looking for starter homes under $500k. The current median home price in the Denver Metro Area is over $600k, which can make affordability a challenge. Even with these record-breaking prices, Denver continues to experience a population boom, which will most likely keep prices where they are—or even push them to greater heights.
How We Got Here
There are many factors that have contributed to the ‘Perfect Storm’ that is the current housing market in Colorado. One of the major reasons is that demand has increased from the population boom that’s been happening for the better part of the last decade and from millennials who are starting families and need to expand their living space.
The other issue is that high demand in the Denver Metro Area has run up against low inventory due to a slowdown in building following the Great Recession, current homeowners holding onto their homes after taking advantage of low interest rates to refinance, and investors purchasing a large percentage of the affordable homes under $500k.
Deborah Shipley, REcolorado Vice President of Marketing and Communications, recently spoke on Colorado Public Radio’s May 9 episode of Colorado Matters about the impact investors have had on the market.
“A lot of buyers are bringing cash to the market. This last March, approximately 21% of all homes were purchased using cash and that’s up compared to previous years. For example, in March of 2021, we saw only 17% of cash buyers. If you look back to 2020, 13% of buyers were bringing cash to the table,” said Shipley. “Many investors do bring cash offers, so that in particular could be why we’re seeing an increase in the number of cash buyers these days.”
What You Can Do
1. Work With Agents Who Use the MLS
When agents add homes for sale to the REcolorado multiple listing service (MLS), it can be beneficial to both buyers and sellers. Deborah Shipley explains that off-MLS listings “are never made available to the massive amounts of buyers who are looking for a home through the multiple listing service. Unfortunately, this takes available inventory off the market to folks who are out there making five and six offers and still not finding a home. It can also do a disservice to the seller because if you’re making your home available more broadly, you’re bound to get a higher price for that home.” When working with a real estate professional, be sure to ask them if they will be using the MLS.
2. Adjust Your Expectations
As a buyer, you may need to adjust your expectations and re-assess your ‘must have‘ lists. When inventory is tight, it might be necessary to look at homes that don’t include all the details and finishes you were looking for at the start of your search. Tough decisions might need to be made about whether or not you want to pay top dollar for a home that still needs quite a bit of work.
3. Take Advantage of Financial Assistance Resources
There are many organizations that offer resources for homebuyers who are struggling to purchase a home due to income limitations. The Colorado Housing and Finance Authority, metroDPA, the Dearfield Fund, and Open Hand Initiative, all offer financial assistance to Denverites who are looking to buy.
To hear personal stories from Colorado homebuyers and the experiences of real estate professionals working with buyers across the state, check out the full episode of Colorado Matters from May 9 on Colorado Public Radio.