The Denver Real Estate Market in May 2022
Due to continued economic issues affecting the entire country, Denver real estate buyers experienced greater balance as sellers adjusted to a slowing market pace in May. While this has garnered a lot of attention, it's indicative of market stabilization and normalcy, not a crash like we saw back in 2008.
"As the stock market continues to be erratic and the effects of inflation are impacting people thoughtout the country, the Denver Metro housing market remains stable. After consecutive months of appreciation, negotiations and bidding wars, seeing modest numbers is a sign that the market has come back to earth."
—Andrew Abrams, Chair of the DMAR Trends Committee
Looking at detached single-family homes, 4,966 new listings came on the market in May, a year-over-year increase of 10.3%. By the end of the month, there were 2,828 active listings still available. While that's only an uptick of 15.7% compared to April, that's a massive increase of 111.7% over the prior year. Certainly good news for buyers who have been accustomed to minimal inventory (causing maximum competition).
As for prices, rising interest rates—and therefore mortgage rates—are cooling things down for buyers. Sellers are coming on the market before rates go higher and finding that other homeowners are doing the same thing. While there was a big rush of inventory in April, the continued wave in May led to a small drop in month-over-month prices while days on the market remained steady.
Detached homes came in at an average price of $805,508. Smack dab in the middle of all closed homes was a median price of $670,106. Both are decreases of less than 2% compared to April, but double-digit increases compared to 2021.
As for attached homes, such as condos and townhomes, the average price for May was $494,419 an increase of less than a percentage point month-over-month, yet 10.6% higher than a year ago. They are also selling 47.1% faster than a year ago as detached home prices drive buyers to this more affordable segment.
Moving forward, one strategy that a buyer's agent can help out with is focusing on the Tuesday market. With this approach, you wait and see what properties came on the market the week prior, made it through a weekend of showings and open houses, and weren't under contract by Monday.
If you pay attention to what's available on Tuesdays, before the next batch of new listings comes on the market, you just might find yourself with less (or no other) offers to compete with and a more motivated seller. Even with rising interest rates, you could find yourself a bargain.
As always, your best bet is to talk with a PorchLight agent who can advise you on when to make your move and how to submit a strong offer that takes into consideration rising rates and your budget. They can also connect you with reputable lenders who can get you the lowest possible rates.
To view our report on Denver real estate market stats for May, click here.
Average vs. Median Price
Depending on the blog, news article or tweet you read, home prices are talked about in either of two ways—average or median. Last month, detached homes in Denver came in at an average price of $805,508.
While it might seem really high, it takes into account the price for all homes that were closed. So, you throw in one or two ultra-luxury properties on one end and it can skew averages higher than what you'll actually see when looking for a three-bedroom, two-bath home in the Denver suburbs.
In addition, such extreme Denver metro properties that push the average up aren't being balanced by $150k starter homes that need a little TLC. Low inventory and high demand over the last couple of years have been driving prices for the "lower end" of the market higher and higher.
Now, median takes a different approach by looking at individual prices. In May, the median price was $670,106. That number is found by looking at the full list of closed home prices for the month and finding the one in the middle.
Here's a very quick, very simple example for a very small market where three homes sold for the following prices:
If you add these all up and divide them by three, you get an average price of $3,600,000. If you're a buyer with a $500k budget, you would likely be discouraged about even trying. And if you're a seller, you might assume that you're in for an enormous return on your initial home investment.
However, the median price is $500,000. That's a big, big difference—much more doable for homebuyers and much more realistic for sellers.
Bottom line? Yes, prices are up significantly year over year. But, when you analyze every closing that occurred last month, the average we're seeing takes into account the sale of several high-end properties, including a $13M Cherry Hills Village mansion.
So, take advantage of the market balancing out right now. Keep an eye on the Tuesday market. And let your PorchLight agent be your guide!