The holiday season is always a magical time of year in the Mile High City. Denver neighborhoods get all dressed up in festive lights and holiday trees to embrace the winter spirit and celebrate with community events. With the city transformed, it's easy to wonder what's happening in the real estate market. While it can be easy to get sucked into the negative headlines, what's important is to focus on the most up-to-date data and educate yourself on how to maximize this time or plan for 2023. Set a dedicated time with your agent to review a strategy that gets you excited about your real estate goals.

Where We Are

Like a school year with its holiday breaks and busy state testing times, the Denver real estate market mimics that seasonal curve. Once we get into November, homeowners decorate their homes for the festive season, prepare to host a holiday party, or travel out of town for the celebrations. This shift forces many homeowners to reevaluate listing in the hopes of enjoying one last holiday season in their homes.

With rising interest rates and growing inflation, it may seem like an unstable, dead-end market, but it isn't. We are seeing solid indicators that the Denver Market is self-correcting.

• The average sales price for both attached and detached homes increased year-over-year by 4.66% in the Metro Area. However, month to month, for the last five months, the average home sales price has fallen, an average of 1.4% with a slight outlier in October of this year. The juxtaposition in data shows the market's attempt at self-correcting its affordability problem while not losing long-term equity.

• Many expired or withdrawn listings in the Denver Metro Area have been removed from the system, forcing a drastic decrease in active inventory. These adjustments are needed to stabilize the turbulent market we've experienced this year in preparation for a hopefully strong 2023. How low active inventory goes is really what drives the spring market so we need that number to drop off drastically for a strong kick off to the new year.

• Compared to last year, we've seen a 2% decrease in the close-to-list price, which would make sense given that we continue to see significant price reductions. This month, we saw an average price reduction of 7.2% of the original price, roughly $48,000. This decrease shows that we are returning to our pre-pandemic market and no longer in a situation where homes receive multiple bids, all significantly over the asking price.

• Average days on market for both detached and attached homes was 34 days. Right now it seems like forever, especially for those selling their homes. Don't panic. The average days on market going back over 15 years is about 60 average days on market.

What Does The Future Hold?

Nationwide, 48.5% of mortgaged homes have more than 50% equity, meaning the homeowner's estimated remaining loan balance is no more than 50% of the property's value, according to one of the leading resources for property data, ATTOM. This increase in homeowners' equity is precisely why we will not have a repeat of the 2008 financial crisis. Before the crisis, lenders had incredibly low lending standards so when borrowers purchased a home, their loan pushed them into a position of having little to no equity in their home. When the 2008 crash occurred, millions of homeowners were forced into foreclosure due to the lack of equity.

But Colorado's market sometimes aligns differently from the national data. We are in a unique metropolitan area in that we often aren't affected as strongly by external factors as much as other metros across the nation. The diverse industries that have established a foothold here subsequently have insulated our state's market from drastic impact as other states experience.

It's hard to definitively determine what our real estate market will look like next year, but as we discovered in this month's report, many elements continue to prove Denver as a strong and stable market. After the holiday season, we will inevitably ramp back up; however, Spring 2023 will be a powerful indicator of what we can expect from the rest of 2023.