Rising mortgage rates are bringing a little fall chill to home sales in the Denver metro area.
The Denver Metro Association of Realtors September report indicates Denver’s housing market is slowing, with homes staying on the market longer.
But prices aren’t dropping significantly and making mortgages more expensive keeps some buyers and sellers on the sidelines.
The September Denver Metro Association of Realtors’ market trends report shows that inventory increased by 93.5% compared to September 2021, and pending sales dropped 27.9%.
And although the median sales price was 9.4% higher than in September 2021, at $580,000, it’s down from May’s high of $615,000.
Houses are staying on the market longer (with homes selling in 26 days compared to 13 days in September 2021), and buyers aren’t getting thousands of dollars over the list price anymore. In September, homes sold for 98.9% of the list price compared with 101.9% in September 2021.
Market correction
Experts say the market is finally correcting after years of unprecedented growth.
According to a study from Point2Homes, Denver homeowners enjoyed an average daily gain of $94 in home value from 2011 to 2021, when the average home price jumped from $231,400 to $607,100. The study didn’t cover the first half of 2022, when prices soared even faster.
Point2Homes studied home price gains across 187 metros between 2011 and 2021 and ranked Boulder and Denver in the top 10 for daily gains.
The continued price increases make housing unaffordable for many Coloradans.
A new report from CSU’s Colorado Futures Center shows housing prices would need to drop an average of 32% to reach a price affordable to the median family income.
“As you can see from the report, it would take pretty considerable drops in values in order for us to get to a level of ‘affordability’ that the state enjoyed back in 2015,” Phyllis Resnick, the center’s lead economist and executive director, tells the Colorado Sun.
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“I use that word in air quotes because I don’t think people thought 2015 was a terribly affordable era. But in retrospect, it actually was because interest rates were almost historically low and the run-up in prices hadn’t happened yet.”
Moving toward balance
Statewide, Colorado’s still in a seller’s market with about two months of inventory available. A balanced market has a three- to six-month supply.
Libby Levinson-Katz, chair of DMAR’s market trends committee, says Denver’s market hasn’t experienced balance for more than 16 years.
“The market is entering a period of neutrality where the bullish ways of extreme markets make way for a stage of compromise, with buyers and sellers working together for a win-win experience.”
The news and editorial staffs of The Denver Post had no role in this post’s preparation.
