With just 1,226 homes for sale at the end of February and average prices inching up again, metro Denver’s residential real estate market shows no signs of slowing down in 2022, according to a Market Trends report released Thursday by Denver Metro Association of Realtors.

Average sales price rose to $647,776, up 6.58% from January and 19.32% from 2021. And while available inventory did increase by 42 homes from January, it’s still 39% lower than February 2021.

“While 2020 and 2021 took different paths, there is one common denominator: hyperactive buyer demand,” Andrew Abrams, chair of the association’s Market Trends Committee, said in the report. “The lack of supply coupled with the surplus of buyers has caused prices to rise quickly leading to an unprecedented close-price-to-list-price (ratio) of 104.75%.”

While those buyers are hyperactive and frenzied now, they’re happy after the sale is complete, said Andrew Malkoski, agent for the Denver 100.

“All those people paying over asking price last year have become whole,” Malkoski said. “It seems as far over asking price as people are going, some are already gaining equity with these rising prices. I had one buyer pay $75,000 over asking price, and the house is now worth more than he paid just five months later.”

The days-on-market dropped to 15 days, down both month-over-month and year-over-year.

The number of closings increased to 3,202, up 5% from January’s closings, but down 19% from 2021.

“Everyone talks about lack of inventory, but it’s more that the demand is so high,” Malkoski said. “We ended the year with the lowest amount of inventory we’ve ever had. But we also had the highest number of sales we’ve had in more than a decade. Sales have gone up every year for the past four years.”

ONE Realty broker Lydia Lin said buyers are resorting to paying the selling brokers commission, in some cases.

“I’ve seen some offers with the buyer offering 1% of the selling broker’s commission, and people are paying 2.5% sometimes. If it keeps going this way, buyers will have to offer to pay that commission,” Lin said.

Typically both sides of the transaction get 3% commission.

Those efforts are on top of waiving appraisals and hard earnest money to guarantee a closing in, say, two weeks, she said.

Lin said she’s logging into her account 20 times a day to try to find new listings.

Asked about hot submarkets, Lin pointed to southwest and northeast metro Denver.

“I’ve had a lot of clients ask for homes in the $400,000 range in the last three or four months. Where are you going to find that? There are pockets in Aurora and the Lowry areas, and southwest near Barnum. Even Lakewood is getting sexy,” Lin said.

The market insights report notes that even buyers who couldn’t compete with large appraisal gaps “used to have a fighting chance of getting a home in new construction neighborhoods, where if they didn’t get one — they could get the next one.

“But some builders are no longer working their way down a list of interested parties. Instead, they are asking for the highest and best offer, essentially creating the same frenzy we are seeing in the resale market,” according to the report.

The report covers transactions from the greater Denver metro area, including the counties of Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park.