Here in Denver, the real estate market typically goes through seasonal shifts; something we haven't seen since the pandemic. Kids are back in school, leaves are changing, and things are slowing down. As we enter this autumnal shift, we're finally seeing real estate metrics return to more normal, pre-pandemic numbers. The latest data from DMAR confirms the start of the fall season, with active listings dropping 5.7% month over month.
Why We Remain Optimistic
Despite the clear seasonality of the market, the current shift we are seeing has been additionally influenced by the rapid rise of mortgage interest rates over the past several months, increasing the cost to purchase a home. However, there are many reasons to remain optimistic about the market and not look towards a similar housing crash to what we experienced in 2008.
Our nation's economy remains active and engaged. Manufacturing continues to grow, consumer spending is up .1%, and unemployment remains low.
The Denver Metro Area market saw a 6.78% increase in average sales price year over year, showing consistent home appreciation.
To experience a similar housing crash as we did back in 2008, a key indicator would be to have a surplus of inventory. The Denver area is still drastically undersupplied, currently, we have 1.7 months of inventory for both attached and detached homes. A balanced market requires 6 months of inventory, and at the height of the 2008 recession, the United States hit a record of 12.2 months worth of inventory on the market. As you can see we are nowhere near that level of inventory.
According to RedFin, people moving to Denver are now armed with a home buying budget 12% larger than what locals are bringing to the table.
President Biden recently announced his student relief plan, offering $10,000 in relief for those still paying loans. According to Education Data, Colorado residents currently have over $28 billion dollars in student loans. Of the 774,000 borrowers, only 52.2% of them are under the age of 35. Biden's new act allows folks the opportunity for homeownership by freeing up cash they would otherwise be using to pay student loans.
Buyers - Make the Most of Inventory Increases
Historically, September offers buyers more options than any other month of the year. Currently, an average of 1,000 new listings are added to the MLS each week. Year over year, active listings have increased by 93.72% for both attached and detached homes. Plus, more inventory allows buyers to have more negotiating power.
Don't let rates inhibit your ability to make your financial dreams a reality. Sit down with your agent to develop a winning strategy.
Sellers - Importance of Pricing it Right
Lawrence Yun of the National Association of REALTORS recently commented, "It is a difficult market for those selling homes and for homebuilders. But homeowners continue to accumulate housing wealth from rising prices." As Lawrence notes, homebuilders are struggling due to increased costs. Buyers are having to forfeit new builds due to timing and rates. This presents a unique opportunity to get buyers into turnkey homes.
While median days on the market have increased to 11 days, pricing your home right can significantly impact your time on the market and your profit. Sellers' pricing strategies that mimic pre-pandemic prices have been extremely successful. For some, they've even ended up in a multiple offer situation. While this month may put the power in the buyer's hands, as the seller, work with your agent to leverage the largest pool of buyers you'll have all year.
The Beauty of Colorado
Despite national headlines, Colorado's market doesn't always align with the national data. The diverse industries that have established a foothold here have insulated our state's market from being drastically impacted as other states. Make sure to consult your agent to get the inside scoop before playing in the Colorado market.
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