Like waters rushing down from the melting snow in the mountains, new home listings usually pour into the metro Denver market around this time of year. But things are not flowing along like they normally do and the blockage appears to be on the side of sellers.
“Traditionally, in the spring selling season, the market sees an increase in both active listings at month-end as well as new listings. The sluggish movement in these categories, however, leaves a lot to be desired,” said Libby Levinson-Katz, in comments included with the latest monthly update from the Denver Metro Association of Realtors.
There were 4,758 new listings for single-family homes and condos last month, a 6.7% drop from March and a 31% decline from a year earlier.
And while the inventory of homes and condos available for sale did rise 2.3% month-over-month to 4,620, that gain is far below the historical average gain of 10.4% between March and April, nowhere close to the off-the-chart 44% gain in inventory seen last year. In fact, the increase was the weakest showing since 2014 for those two months.
Rather than rising, the number of closings fell to 3,701 in April, a 7.9% decline from March and a 30% drop from the frenzied pace of April 2022. When listings do hit the market, they are moving quickly, spending a median of seven days last month compared to 10 days in March, 25 days in February and 34 days in January.
That means if buyers find something priced competitively, they should move on it. The respite they had this winter to mull things over for a few weeks looks like it has ended.
That said, some properties continue to languish. Nick DePasquale, a Realtor cited in the report, described one Highlands Ranch listing that spent 362 days on the market. Originally listed at $7.5 million, a buyer didn’t show up until the price fell to $5.1 million.
The median price of a single-family home that sold in April was $640,000, which is up 3.2% from March, but down 5.9% from a year earlier. A year ago, the median closing price was $684,550 and buyers paid 6.87% above the list price on average.
Now, buyers are paying just a sliver above the list price, indicating a more price-stable market, said Levinson-Katz, a Realtor who heads up the committee that prepared the report.
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For condos and townhomes, the median closing price was $410,000, up 0.7% from March and down 6.8% from a year earlier.
Although home prices have come down the past year, mortgage rates remain elevated, and that might be keeping some sellers on the sidelines with what is described as “golden handcuffs.” Many borrowers are sitting on 30-year mortgage rates below 3%, and if they were to sell, they would be hit with rates approaching 7%, according to Bankrate.com.
Property taxes are another issue that will weigh on affordability going forward. Colorado as a whole saw a 33% average increase in residential property values between mid-2020 and mid-2022, and some suburban pockets in the metro area surpassed 50%. Although efforts are underway to ease the shock come tax time, already-stretched buyers will have to shell out more money each month.
“Higher tax bills coupled with increased interest rates are going to have a significant impact on buyers’ ability to purchase throughout the state, specifically the metro area,” Levinson-Katz said.
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