With talks of a recession on the horizon and a lot of uncertainty in the air, we want to provide you with all of the facts when it comes to our real estate market. If you are a buyer or seller and you're looking to dive into this market, you may find yourself surrounded by people who are telling you to "wait until the market crash" or "wait until rates drop" or "don't sell because you won't have anywhere to go". Well, we have some great news on all three of those points, and we can't wait to share it with you!
Denver's Sellers Market is Cooling, Not Cold
The beginning of the year was described as a "frenzy" and while that may have been exciting for sellers looking to cash out, it wasn't always the perfect market. Fierce competition early in the year forced sellers to go to the market even before they were ready or knew where to go. Buyers were outbid and priced out of markets that were attainable just one year ago. And the promise of interest rate hikes only added to the busyness, placing our spring market under intense pressure for everyone to perform. They said it wasn't sustainable, and it wasn't.
So where are we now?
Between buyers being pushed out of the market from the competition and increased interest rates, we are in a market that overboiled. With fewer buyers, the amount of multiple offers being received is now greatly reduced. Homes that saw 10-15 offers in our pressure-cooked spring market are now going for at or even below the asking price. If you've heard rumors of someone having to give away their firstborn to buy their house, well, now sellers are actually negotiating with buyers on price, inspections, and appraisal gaps.
And sellers still have a lot of advantages too. We are upfront when we say it won't be like the frenzy at the beginning of the year. If you sold at the beginning of the year you know how exciting, but also how stressful it was. Sure you may have had 10-15 offers, but with over 50 showings in one weekend, hundreds of people walking through your house, and then hoping to find your next home on the other side of it... well, it wasn't always easy. Now that the days on market are increasing, our sellers know that they can be patient and wait for the right buyer to come along. This gives them time to look for a new home themselves, prepare for the move, and work at a more sustainable pace.
Bottom Line: The market is cooling down, but it hasn't stopped cold. And with no housing bubble or housing market crash on the horizon, it won't stop anytime soon.
On the far right, you can see that showings dropped nearly 10% from last week and are almost 50% less than last year. This represents a steep decline in buyer demand within our market.
"Marry the House, Date the Interest Rate"
We know that the rise in interest rates is a pain point. And while we can't call the Feds and negotiate on your behalf, we can be your advocate when it comes to getting the perfect home. With competition down and inventory rising, there is a window of opportunity right now that we are so excited to see for buyers.
Here's the scenario:
We have more homes to choose from than any other month in the last two years and buyers finally have the options that they have desperately wanted!
Competition is seasonal, which means it's cooling now but will inevitably rise by the new year.
You can time competition and inventory, but you can't time interest rates.
Now is the time to buy when competition is so low, and refinance once rates start dropping again.
Marry the House: Get into the home you love, start building equity and appreciation, and stop the cycle of renting for good.
Date the Interest Rate: Rates are always changing, and the market shifting is a good sign that they'll drop in the near future. The chances are high that you will move or refinance long before your 30-year mortgage is complete - so use the time to your advantage.
Bottom Line: Inventory is going to rise at a steady pace for the next 4-6 weeks. After that, we historically see the market go stagnant as people head back to school, start their regular work routines, and the Broncos start playing. This is the window of opportunity many buyers are missing out on because they are "waiting" for something to change.
The blue line trending on the far right shows that the number of active listings is steadily increasing. We currently have 84.8% more listings on the market than just one year ago.
Denver's Economy is Strong
The national conversation is different than the local conversation. Locally, our economy is incredibly strong. And real estate is local, in fact, it is hyperlocal. When we price homes we focus on very specific details of the home, neighborhood, and area to build our market analysis. We do the same when it comes to housing appreciation. As experts, we are confident that the Denver market will continue to appreciate in the coming years due to increased demand and low supply. Here's how we know demand isn't going anywhere:
The average age of a first-time home buyer is 33 years old, and 30-year-olds make up the largest age demographic in our country.
Denver has been consistently rated a Top 5 destination for this age group (Millenials), placing Denver at the top of many potential home buyers' wishlists.
Our largest buyer pool is arriving at the home buyer scene, and we won't have enough homes to fill their needs for many, many years to come.
High demand and not enough inventory over many years means home values will continue to rise as long as these factors stay consistent.
Bottom Line: This is the market we've been hoping for. It has way more inventory for buyers and great appreciation for sellers, and these windows of opportunity are here for a very short amount of time!
The odds of selling dropped to 66% this week and we are seeing a trend that it will continue to decrease as we head further into the year.
Question: What's a rate buy down?
Answer: Some sellers are getting creative. Rather than drop the home price, we are starting to see sellers offer to "buy down" a buyer's interest rate. This can help a buyer who has been approved at a 5-6% interest rate be eligible to purchase the home in the 4% range. If done right, it is a huge win for all!
*All Denver Real Estate Market Information graciously provided by
Megan Aller, First American Title Company
