Metro Denver’s housing market ran cool in July, with closings off 16.3% from June and price gains showing signs of flatlining, according to a monthly update from the Denver Metro Association of Realtors.
The number of homes and condos sold fell from 4,395 in June to 3,677 in July. Over the year, sales are down 18.5% as higher mortgage rates reduce affordability for would-be buyers.
New listings also remain off substantially, down 15.3% month-over-month and nearly 25% over the past year. Sellers holding low mortgage rates, many below 3.5% on a 30-year loan, are hesitant to list their properties and borrow at rates of around 7%, a phenomenon known as the “golden handcuffs.”
More sellers who do list are having to provide buyers with concessions to get deals done. About three in 10 sales involved a concession in June of last year and this June, the figure was closer to one in two, with the average amount of assistance at $7,295, according to Libby Levinson-Katz, chairwoman of the DMAR Market Trends Committee, which prepares the report.
Prices, after rebounding in the first half of the year, are starting to soften again. The median sales price of a single-family home fell from $655,000 in June to $650,000 in July, the same level as a year earlier.
Condo and town-home prices stayed flat between June and July at $420,000 and are up 2.9% from a year earlier.
New listings spent an average of 23 days on the market in July, the same as in June, and up from 13 days last summer. The number of listings available for sale rose 3.7% between June and July to 7,361. But the month-end inventory is down 14.4% from July of last year.
Lawrence Yun, chief economist at the National Association of Realtors, said in a press briefing Wednesday that the country averaged around 2 million listings per month prior to the pandemic, but currently has about 1 million. During the worst of the housing bust, there were 4 million listings per month on the market.
There were too many homes on the market given the number of buyers. Now the country is in the opposite position, even with elevated mortgage rates. And whenever mortgage rates do drop, the market could go into a frenzied state again given pent-up demand on both sides.
“Can we find a way to bring more inventory?” he asked, suggesting tax policy might play a role.
The Home Buyer Tax Credit helped soak up excess inventory during the housing downturn in the late 00s. The NAR is lobbying Congress to provide temporary capital gains tax relief to investors who sell their homes to owner-occupants.
Median home prices in metro Denver are up nearly 40% on a year-to-date basis from where they were in 2019, and a tax break could offset a significant tax hit and motivate more investors to sell.
“Maybe by providing some tax incentive to help investors unload we can get some immediate inventory on the market,” Yun said.
