Recent interest rate hikes are starting to cool Denver’s red-hot housing market.
A report by Redfin shows that 46.7% of home sellers in the Denver metro lowered their prices in May.
“There are two kinds of sellers in today’s market: Those who already know the market has cooled, and those who are learning about the cooling market as they go through the selling process,” says Redfin Chief Economist Daryl Fairweather.
“The former wants to sell quickly before the market slows further and they’re willing to price slightly below comparable homes in their neighborhood right away, and the latter may have to drop their price if their home doesn’t attract buyers within a few weeks. As more sellers come to terms with the slowing market, fewer homes will have price drops.”
Redfin’s report shows Denver’s median home sale price was $614,000 in May.
Still a seller’s market
Chad Murphy, an 8z real estate agent, says sellers need to use precision pricing and can’t expect to get offers for $10,000 to $100,000 over the list price.
He says increased inventory and higher interest rates keep houses on the market longer. Rather than sell in a few days, more homes remain available for 14 to 30-plus days.
There’s still not enough inventory to balance the market, but the changes should be more favorable to buyers.
Consequently, some sellers offer credits to pay closing costs or buy-off points to help offset interest increases.
“It’s a changing market,” he says. “But until we see more inventory, it’ll remain a sellers market.”
Susan Frisk, West+Main real estate agent, says she has not seen any price decreases in the metro’s popular neighborhoods so far.
“Where the supplies are limited, the prices aren’t decreasing,” she says.
Monthly payments continue to climb
Even with some price tempering, higher interest rates may keep some potential buyers out of the housing market.
A study from Zillow shows the monthly mortgage payment for a typical home purchased in metro Denver in May was 54.5% higher than in May 2021.
That pushed the “typical” Denver monthly mortgage payment to $3,394.
“Mortgage rates took an unprecedented leap skyward over the past two weeks and quickly multiplied housing costs as they rose,” said Zillow economist Nicole Bachaud in a release.
“We are already seeing signs of waning demand, and expect these recent rate hikes to quicken the market’s needed rebalancing. While shoppers will likely experience less competition for homes than the frenzied recent months, their purchasing power has dwindled.”
The news and editorial staffs of The Denver Post had no role in this post’s preparation.
