Negative news continues to dominate the media, especially regarding the real estate market. With the latest changes to the world economy, it's clear these fears have been perpetuated to the point of panic. Let's lay out the facts. Yes, the market is slowing down, but that doesn't mean it is dead. We're just going back to where we were before the pandemic.
PRICE REDUCTION VS. SELLER CONCESSION
We're seeing more drastic price reductions coupled with seller concessions, especially in highly desirable areas where we haven't seen reductions in the last two years. Across the Denver Metro Area, homes that went under contract show that 47% of listings made at least one price reduction, a 26% increase year-over-year. Historically during September, about 4.9% of listings take price reductions. The average price reduction currently, is approximately 6% of the list price - roughly $46,000 in the current market. For the $400,000 - $800,000 home price range, we saw that 50% of closings had seller concessions, an average of $5,500. Of those who offered concessions, 50% also had a price reduction in addition to seller concessions.
ARE WE IN A BUYER'S MARKET?
Some are saying we are in a buyer's market, but that isn't actually the case. When looking at available active listings, traditionally, a market with more than six months of inventory is considered a buyers market. A market with less than three months of inventory is effectively known as a seller's market. For Denver to flip to a buyers' market, 28,000 listings would need to be added to inventory. We currently only have 28.1% of the inventory required for a balanced market.
We are seeing home prices slowly correcting, more so than a seasonal transition. Home prices are currently down by 9.9%, but the Denver Metro Area is up year-over-year for average sales price by about 8.7%. Buyers, take advantage of the largest pool of available inventory all year.
MARKET CORRECTION
Currently, we are far from a market going into a deep corrective state. The Denver Metro area would need a higher supply of homes, unemployment claims to increase, and a lack of home equity for property prices to drop drastically. But that doesn't mean smaller 'corrective' factors aren't balancing the current market. Factors currently affecting the market positively include job creation, lack of consumer debt, low foreclosure rates, and low national mortgage debt.
When we do make the complete transition to a balanced market, it will be noticeable. The market will feel vastly different from where we are currently, homes will sit on the market for months instead of weeks. Take advantage of the market we are currently in, knowing that you can always refinance if need be at a later time. Connect with your Corcoran Perry Agent to strategize your approach.
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