Since 2014, the central Denver (map) residential real estate market has been appreciating at an incredible pace. What you may have read in the paper or heard on the news recently sounds a lot like what you’ve been reading or hearing over the past seven years. However, today’s market is nothing like the past seven years, or even last year. Today, March 23, there are 75 homes on the market in central Denver. Compare that to March 2021 when we had 146 homes on the market, or March 2020 when we had 385 homes on the market at the onset of a global pandemic. Today, supply is slim pickings!
With so few options available for sale, we dove deeper to see how quickly homes listed this year were going under contract. Of the 442 homes in central Denver that have been listed and gone under contract since January 1, 374 were on the market for seven days or less, or about 85% were under contract in the first week.
We then graphed the percent over asking price that homes sold for by days on market. As you can see, around day 5 value begins to fall and by day 7 homes are selling for close to their asking price. Nothing kills value more than extended days on market.
Also interesting to note, homes that sold without at least a full day of exposure, sold for much less than those that were thoroughly exposed to the market. The sweet spot for maximizing your best return is between 2 to 4 days on market.
Of course, where you price your home will determine how successful you are in selling during those first few days. Overpricing is the worst mistake a seller can make. Many sellers are concerned that underpricing is the second biggest mistake. However, this market is too competitive to make underpricing a concern, even at high price points where demand is softer. Take for example, 400 S Steele, #16 which was listed at $2.1mm, and sold for almost 50% more 2 days later at $3.1mm. Given 2 to 4 days of exposure, the market will correct an underpriced home, and most likely sell for more than a home that’s overpriced. In addition, a well priced home will typically provide a seller with the best terms: free rent back, limited inspection, appraisal gap coverage, and more earnest money.