Housing prices hit a 31-month high in February amid depressed inventory, making it hard for first-time buyers to purchase homes.

The Case Shiller Home Price Index for the nation rose 5.7 percent in January over the previous month and increased 5.9 percent from the same month a year ago. Inventory dropped to its lowest level on record in the first quarter of 2017, falling for 21 straight months by 6.4 percent year-over-year.

Homebuyers have found themselves in a fiercely competitive market for an ever shrinking number of homes. Although construction is expected to notch up as the weather warms, it will not be enough to fulfill the demand of those willing to buy.

“The numbers for first time homebuyers are really stacked against them,” said Cheryl Young, a senior economist at Trulia.

In Denver, which has seen the third highest rise in home prices in the 20-City Index, real estate agents are finding it tough for buyers to close the deal without an edge.

“I’ll even have my buyers write a cover letter,” Neil Walton, a real estate agent at 360dwellings said. He asks his clients to send personalized letters telling a seller who they are and what their background is. Walton writes cover letters about himself, as a realtor, and his clients too to catch the seller’s’ attention.

When buyers are up against 10 or more offers on a home, real estate agents get creative. They tell their clients to cover the difference of appraisal values, waive some inspection rights, and include escalation clauses to beat out competing offers. They also offer shorter closing cycles and rent backs, allowing sellers to stay in their home for up to 90 days so that they can find another home.  

“People are getting frustrating with having to concede a lot on the buy side,” Walton said.

Demand in Denver will not wane anytime soon. Housing prices are still considered relatively low, particularly for people moving in from coastal cities and a large young population are still attracted to secondary tech hubs like Denver, sacrificing high paying jobs for lifestyle and quality of life.

Making the situation worse, wage growth is still being outpaced by housing prices. Although paychecks have slowly grown due to strong consumer confidence and minimum wage increases in several states, it will not be enough for homebuyers to move in the market.

People need to dole out a larger share of their income in order to buy their first home, Trulia’s Young said. First-time homebuyers are paying 38.5 percent of their income towards their starter home while homeowners looking to trade up have found themselves spending 25.5 percent of their income. Since lenders generally ask for 36 percent of a person’s income in order to purchase a home, that share was calculated by the median priced home in a metro area.

With rents climbing as well, homes are increasingly less accessible for buyers. Tight inventory and high prices are also deterring people from trading up to larger homes. With less people willing to sell, supply is driven down further.

“People are holding their homes longer because they don’t know if they sell their house, where they would move to,” said Jeff Plous, a realtor at Denver-based ONE Realty.

The hottest markets are showing no sign of a cool down. In addition to Denver, Portland and Seattle lead the 10-city and 20-city indices with prices rising to 9.2 percent, 9.7 percent, and 11.3 percent, respectively.

“It’s not sustainable,” said Steve Hovland, director of research at HomeUnion, a real estate investment and management company. “It will fall back to earth, particularly this year.”

Though the Federal Reserve’s recent rate hikes will not move mortgage rates much, quick, successive rate hikes will eventually bring mortgage rates in tow, according to Hovland.

“We’re seeing rents outpace mortgages in a lot of markets,” he added. “It’s never a good thing when home prices have far outstripped people’s ability to buy homes.”