The market frenzy continues in most areas and price points in Boulder County. Stories of multiple offers and buyers fiercely battling for new homes hitting the market far outweigh the stories of homes sitting for more than the first week. I’ve heard of buyers offering 15%, 20% and 25% over asking to rise to the top of the pile of offers sellers are reviewing. It’s even become difficult to string together 5-6 homes for showings with the very strong showing demand, 15 minute showing windows and limited slots over the first weekend. So, when will this end?
One way to possibly answer this question is to look at how many homes, single family and attached, are entering the market and how many are leaving the market. Homes entering the market are pretty easy to see, new sign in the yard and a new listing in the MLS system. Homes leaving the market as sales are easy to see, but then there are also the rare homes that leave the market because they don’t sell and are withdrawn or expired. If we subtract the homes leaving the market from the home entering the market we can come up with a replacement rate for the market. A positive number says the number of homes for sale is building, a negative number says the number of homes for sale is declining. So, luckily, I started tracking these numbers in spring of 2019 and have a baseline pre-COVID. Here’s the chart of that data.
Interestingly, most of 2019 had a negative replacement rate, meaning we were losing homes for buyers to choose amongst. 2020 started with generally building numbers of homes and then you can see when COVID hit and many homes left the market. A 2-month rebound once we could start showing homes again, but since June 2020, the numbers of home for sale has been shrinking aside from the 4-5 individual weeks when a few extra homes hit the market. Anytime we have seen more homes enter the market, we see a corresponding jump in the # of homes under contract which tells me if we had more homes to sell, they would be selling.
For the current frenzied market to end, our replacement rate not only needs to move into positive territory, it needs to move into positive territory without a corresponding jump in homes under contract meaning we’ve finally satisfied the demand currently out there. So far, I’m not seeing that change in the trends in the data.
Enjoy the Spring weather!