The Denver Real Estate Market in December 2022
Finishing out the year, the winter slowdown was even more pronounced in December due to higher interest rates. Buyers are still grappling with affordability and sellers continue to adjust expectations after two years of booming prices and intense competition.
In December, the median price for detached, single-family homes dropped again to $600,000 down from $615,000 the month prior. Prices still eeked out the smallest increase of 0.01% compared to the same month last year.
Looking at 2022 as a whole, single-family median prices came in at $588,000 and 12% higher than all of 2021. For more perspective, the median home price for the entirety of 2019 was $420,000. So, homeowners gained a significant amount of equity over just three years and even with prices retracting now, sellers still stand to make a hefty return.
As for condos and townhomes, the median price in the attached market decreased to $405,000, down $5k compared to November. However, that's a decent year-over-year bump of 5.74% compared to 2021 when the median price was $383,000.
And again, if you're thinking about selling your condo but not sure if now is the right time, the median price for all of 2022 was $415,000. Back in 2019, it was $309,000. That's a $106k gain you can still potentially capitalize on if you make a big move.
As for inventory and active listings still on the market at the end of the month, this is what separates today's market from the crash back in 2008.
Across both segments, detached and attached, active listings at the close of December were up 222.1% compared to the same time in 2021. However, just 1,735 new listings came on the market. That's down 35% month-over-month as well as year-over-year. Without a surge of listings flooding the market like we saw in 2008, buyers are chipping away at the balance and keeping inventory low.
We're left now with a more balanced and sustainable 2023 market, though interest rates will continue to be a wild card as the inflation battle continues. Still, keep this in mind:
“There are many opportunities for buyers in this market; motivated sellers are willing to negotiate on price and inspection items and pay down the interest rate for buyers to make the home more affordable. Sellers must adjust their expectations, know that this market differs from the past couple of years and be patient...it is still a good market for sellers willing to prepare their homes and price competitively.” —Amanda Snitker, Vice Chair of the DMAR Market Trends Committee and Denver Realtor®
Buyers also have new conforming loan limits to help them get into a conventional loan in 2023. The baseline loan limit of $647,200 increased to $726,200 nationwide, making home buying easier and more affordable. More specifically, conforming loan limits in Denver and most surrounding areas increased to $787,750 while Boulder County jumped to $856,750.
This is good news for sellers as well, and we could see a busy spring market no matter what direction interest rates go.
Help Your Home Stand Out with a Pre-Inspection
Investing in a home is a significant transaction with buyers often putting all of their savings into the associated costs—earnest money, down payment, and more. Over the last couple of years, low interest and high competition have led to buyers waving inspections and sometimes winding up with unforeseen costs after closing. There are a lot of horror stories out there.
In today's market, sellers can help their homes stand out to buyers by getting inspections done prior to going on the market. It shows transparency and will put minds at ease knowing that despite having to adjust to higher interest rates, a buyer will be able to move right in and begin enjoying the home. Here are a few inspection options you could discuss with your real estate agent.
- General Inspection: A visual look at HVAC, plumbing, electrical, roof, attic, floors, windows, doors, foundation, basement, cosmetic and other components.
- Sewer Scope: Video inspection of the sewer line from the house to the main sewer. It can find blockages, cracks, invading tree roots, and other issues.
- Radon: Basements, crawl spaces and main floors are tested for radon which has been known to cause lung cancer if exposed over long periods of time.
- Mold: An evaluation to identify possible sources and signs of mold, from visible water damage to areas with excess humidity. May take air/surface samples.
- Chimney: Looks for proper chimney and fireplace venting, structural integrity and creosote buildup which can combust and cause a fire.
- Asbestos: A professional will provide an initial visual inspection, gather samples, have them tested and deliver a report on the findings.
- HVAC: A technician will thoroughly review and test heating and cooling equipment, as well as whole-home indoor air quality systems.
- Roof Certification: A roof’s condition will be fully inspected and if no repairs are needed, it will be certified for 2-5 years based on expected lifespan.
- Well & Septic: The well system will be checked for volume/pressure, proper construction and working parts. Water will be tested to ensure safety. All septic tank components and interior will then be inspected and the drain field tested.
- Structural A civil or structural engineer can assist with concerns regarding the foundation, load-bearing walls, additions and the general integrity of a home.
- Pest: An inspector checks the exterior and interior of a home for signs of damage, an active infestation and areas that attract pests.
- CLUE Report: This property insurance report shows claims made in the last 7 years. Numerous claims may lead to a buyer paying a higher premium.
You can also discuss an incentive such as a home warranty—coverage for the appliances and/or the maintenance systems (e.g. HVAC) in your home while the home is under contract. If anything breaks down, a warranty can help cover the cost to fix or replace it. And it can be transferred to the buyer after closing for added peace of mind. A warranty is a great way to protect your home value and keep your deal on track to closing.