Despite the inclement weather and tumultuous interest rates, pending sales in Denver increased month over month in June by 5.74%. Coupled with mortgage rates experiencing less volatility this month than any other month this year, we are seeing the Denver Metro area real estate market remain strong. Yes, the market is slower than last year but determined buyers and sellers remained bullish in navigating the challenges in the market.
Denver's Cycle
The Denver Metro real estate market experiences predictable and annual ebbs and flows alongside seasonal trends. As such, the Denver market typically experiences a compression and retraction cycle as we go through the market each year. In the first half of the year, the market historically experiences a solid start to the year, with lots of activity. We see activity drop off significantly as soon as we hit the mid-year point (Fourth of July).
This year, however, buyers started shopping for homes on the market earlier than expected. It seems the post-pandemic approach to real estate in the Denver area is - the earlier, the better. The majority of buyers, this year, were house hunting as early as March and remained active in their search until late May. Year to date, 21,534 homes have closed this year in the Denver Metro area, a 23.7% decrease from the 28,027 home sales that closed in the first half of 2022. Interestingly, we closed roughly the same number of homes in the first half of 2019 (28,198 homes closed) as we did in 2022. While the pandemic drastically impacted our market, a theoretical bell curve clearly shows the lack of long-term effects that it will have on the area's real estate markets.
As such, the Denver market went into its retraction cycle about a month earlier than expected, resulting in a 5% decrease in home prices by the end of June. We can expect to see a correlating price drop starting in July. However, current data predicts we will not see as drastic of a drop off in home prices as we've experienced in summers past.
The Scoop On Inventory
Overall new listings are down year over year by 27%; however, month over month, new listings increased by 8.69%, adding 5,628 new listings to the MLS in June. Between low inventory and a pool of buyers that have no choice but to move this year, our market is self-correcting, keeping the relationship between supply and demand in check.
The reality is that people are moving because they have to - not because they want to. Major life events often serve as the catalyst for the change - birth, death, divorce, loss or job change. Buyers are more discerning than ever - often 'forced to move' on a timeline and without an endless budget. Sellers are learning patience as buyers continue to set the market and work with buyers willing to walk away.
Despite sellers' increasing willingness to make the necessary improvements nationwide, homeowners spent $337 billion on new home improvements and repairs in 2020, $368 billion in 2021, and an estimated $427 billion in 2022. In 2022 - 60% of homeowners did not use a contractor for their home remodeling projects, instead opting to do the work themselves.
Whether you're looking to buy or sell, don't let the price tag of home improvements deter you from obtaining your dream scenario. In such a competitive real estate market, it is worth exploring all your options to maximize your dollar. Discuss your plans with a Corcoran Perry & Co. agent, as there may be a renovation loan program perfect for covering the upfront costs of your dream renovation.
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