The summer slow down remains a consistent trend in Denver's extremely seasonal real estate market as buyer's shift their focus from home searching to maximizing their time in the great outdoors. Appreciation rates seem to have slowed a bit too and recent headlines have Denver residents asking, œHas Denver shifted to a buyer's market?
The Numbers
Average sales price for single family homes is up slightly from last month and up 4% year over year. A large number of closings in two of Denver's biggest and priciest new condo projects, The Laurel and The Coloradan which were recorded in last month's numbers, was enough to sway the condo market into the negative month over month, while the average price for condos is still up 4% from this time last year.
Inventory is Up
The basic concept of supply and demand is a major factor to consider when determining if Denver has shifted to a buyer's market. When supply outnumbers demand the tables will have turned, but we aren't quite there yet. We are shifting out of the extreme seller's market that we've become accustomed to in recent years, but that doesn't mean it's turned into a buyer's market. In fact, while inventory is up 22% year over year, Denver is sitting at just 1.73 months of inventory for both single family homes as well as condos. For a balanced market where neither the buyer nor the seller wields an advantage, that number would need to be closer to six months of inventory. When and if that number gets over six months, then Denver will have shifted to a buyer's market, making œmonths of inventory the key statistic to watch.
Rates are Down
Great news for buyers as well as homeowners who could benefit from refinancing - interest rates are down. Lower rates can re-invigorate buyer activity, in turn benefitting sellers by increasing showings and buyer interest.
Opportunity for Buyers
Sustained low interest rates mean buyers can afford more home, which is a major incentive to get off the fence! Here are some other reasons to buy now:
- The end of August has lower buyer activity (read: less competition)
- Higher days on market means you can take more time to make those big decisions
- Seller concessions that have been non-existent in recent years are back
- While still a seller's market, buyers are in a better position to ask for repairs at inspection than in recent years
- An uptick in price drops (22% last month)
Still a Seller's Market
Sellers shouldn't be discouraged by the buyer window that has opened, but they should re-set their expectations, embracing the spirit of negotiation and considering offers in hand instead of waiting for the competition that may never come. Pricing is also more important than ever and being realistic about any objections buyers may have to price, location, or condition. In the buyer's frenzy that began in 2012, buyers were able to overlook busy streets and funky layouts, however buyers will start to become more discerning with more inventory to choose from.
Many of us in Denver have felt the shift, although not a drastic enough one to start referring to it as a buyer's market. All indicators point to a stable market and Denver homes are still selling for over 99% of their asking price. Another thing to keep in mind is that price growth is highly area specific among Denver's diverse and unique neighborhoods. Use our Denver Urban Real Estate Index to compare Denver neighborhoods and see how your own ˜hood stacks up.
A special thank you to Jessica Cressfor starring in our Denver July Market Report video.
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