The Denver Real Estate Market in September 2022
While it might have seemed impossible a year ago, the Denver real estate market has certainly gone through a lot of changes. So, are we in a buyer's market? Not quite. A low inventory of homes for sale is likely to keep things from swinging in the opposite direction that we've been experiencing over the last couple of years. The new norm might look more like balance.
“I believe we are moving toward a balanced market, which we haven’t seen in over 16 years. A traditional cycle for the Denver real estate market is seven years. Due to an economic crash and a global pandemic, the cycles were extended, but a correction is needed. 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.” —Libby Levinson-Katz, Chair of the DMAR Market Trends Committee and Metro Denver Realtor®
Let's take a closer look. In September, 3,772 new detached, single-family listings came on the market, a small increase compared to 3,693 the prior month. And 5,798 homes remained active at the close of the month, a year-over-year increase of 107%. The median price also decreased slightly from $645,000 in August to $632,000 in September. However, year-over-year prices are up 9.72% which is healthy.
Days on market also jumped from 20 to 28. It looks like buyers now have quite a bit more time to shop for homes that fit their needs and budgets. This also is an indication that sellers, along with their agents, should be very strategic about pricing if they want to attract an offer quickly. Looking at recent closings rather than historical data to determine a listing price is critical.
As for the attached market, such as condos and townhomes, data shows that in September, 1,465 new properties came on the market, a month-over-month decrease of less than one percent, and the month ended with 1,885 listings still on the market. The median price here went up compared to August, coming in 2.7% higher at $410,000 last month. Compared to 2021, prices are also up by 7.9%.
With days on market indicating that sellers and their agents are still adjusting their expectations and pricing strategies, the downward trajectory of prices could continue. Going into the winter however, sellers tend to wait out the holidays before going on the market, so a seasonal drop in inventory could keep prices steady or even lead to an increase. More on that below.
Today's Real Estate Market Explained
It’s no secret that the real estate market has shifted. However, there’s a whole lot of media hype and confusion about what’s actually going on.
First, the real estate market is not crashing.
The market is decelerating because the Fed is trying to reduce inflation and slow housing appreciation to a more normal pace. Over the last two years, there has been double-digit home appreciation. The pace of the market was never sustainable and only negatively impacted average buyers and overall affordability.
Even with this current slowing, the National Association of Realtors (NAR) predicts that home values nationwide will still increase by 9.6% in 2023 which is a healthy number. Here's more insight into today's real estate market.
Extreme Seller’s Market Conditions Still Exist
Less than a three months supply of homes for sale indicates a market heavily favoring sellers. The Denver and Boulder areas have around two months of inventory and are not likely to reach a balanced market of six months.
- Buyers can now take time to think before making an offer, but not too much.
- For sellers, the name of the game is to price conservatively and your home will sell.
- Well-priced homes in popular areas are still selling in an average of 2-3 weekends, and bidding wars are still happening. This further indicates a strong market.
Higher Interest Rates or Higher Prices?
It’s understandable that today’s higher interest rates can be concerning. However, this doesn’t necessarily mean that you’ll be paying more. Just six months ago:
- Many buyers could not win bidding wars because the competition was so fierce. On average, homes were going for 25% or more over the asking price.
- Buyers often waived inspections and other protections that left them paying for costly repairs on their homes.
- Some buyers also paid cash for an appraisal gap, while others put down non-refundable earnest money which made it costly to get out of a contract if serious issues came up along the way.
Yes, Smart Buyers Should Buy Now
Within today's post-summer and pre-holiday window, buyers have more homes to choose from and a chance to get a well-priced home, seller concessions, and an actual inspection resolution. The smart move is to take advantage of today's more balanced conditions.
If you're thinking about waiting, here's what's ahead. During the holiday months, homeowners often wait to list—some even pull their active listings off the market, resulting in fewer choices for buyers. And while appreciation has slowed, values and prices will continue to increase each month.
Then in January/February, we'll likely see a seasonal buyer frenzy once everyone has adjusted to the new market and fluctuating rates. The result will be more competition and fewer opportunities for buyers. So, if you'd like to get started, reach out to one of our friendly agents.
