The Denver Real Estate Market in May 2023
Historically, May is an excellent time to sell a home. Buyers, especially those with kids, want to secure a new home and get moved after the school year ends but with plenty of time to enjoy summer adventures. Accordingly, the Denver real estate market experienced a month-over-month bump in new listings, as well as an increase in homes going under contract and closing.
Still, overall inventory remains incredibly low, creating competition in the most desirable neighborhoods and for the most attractive homes.
Taking a closer look, the median price for detached, single-family homes increased from $640,000 in April to $659,945 in May. Compared to the same time period in 2022, that's a drop of 1.5% but not bad considering the year-over-year decrease in April was 5.9 percent.
Homes are going for 100.6% of their asking price, a slight increase over the previous month—yet lower than the 105.3% of asking in 2022.
As for home inventory, there were 3,627 new detached listings that came on the Denver real estate market in May, an 8.8% increase over April yet 28.9% lower compared to May of 2022. On the flip side, 3,118 single-family homes went under contract last month and 2,900 closed. Both month-over-month increases yet year-over-year decreases.
So, how fast are homes selling? Days on average days on the market dropped yet again to 21. Median days on the market, that number right in the middle, came in at 6 days. Last year, the median was just four.
This disparity in average versus median goes to show that there are homes sitting on the market for quite some time. And these aren't necessarily distressed properties or homes in the least desirable neighborhoods. That's why it's important for buyers to work with a real estate advisor who can help them uncover these gems that will have much more motivated sellers. There are bargains if your agent knows where to look.
Much of the same happened in Denver's attached real estate market such as condos and townhomes. New listings came in at 1,508 properties and 1,288 listings went pending, both increases over April. Prices also jumped by 3.7% month-over-month, coming in at $425,000. In May of 2022, the median price was $430,250, so this year's buyers are enjoying a little relief.
So, what does the market look like as a whole? According to Libby Levinson-Katz, Chair of the DMAR Market Trends Committee, "Buyers aren't rushing to see homes as quickly and aren't submitting offers within hours. Conversely, sellers are more realistic and strategize more with price reductions. If they are fortunate to find themselves in a multiple-offer scenario, they are more willing to address inspection items to move to the closing table."
If May's increase in new inventory continues to climb in June, it's likely that buyers will have more options and more time to shop around. Prices will likely increase but remain tempered compared to years past. The market would need to see a massive rush of new listings to make a significant price impact in favor of buyers. And with persistently high interest rates, homeowners are in no rush to sell.
No matter what, make sure you have a knowledgeable and experienced expert by your side to be your advocate and help you achieve your real estate goals.
Home Selling and Capital Gains Tax
Even though home prices have cooled in 2023, homeowners are sitting on a lot of equity and many are making a significant profit with the help of a professional agent who knows how to get a top-dollar sale.
If you are thinking about selling, and have been in your home for a while, it's nearly guaranteed that you'll sell for more money than what you bought the home for. Thus, you may have capital gains tax on your mind.
However, keeping more cash in your pocket is possible if you meet the requirements.
First, there's the exemption threshold. If you’re eligible and file as single with the IRS, up to $250,000 of your capital gain is exempt from taxes. For married couples filing jointly, that figure goes up to $500,000.
Here are the eligibility requirements to claim this exemption:
- You must have owned the home for at least 2 years out of the last 5 (up to the date of closing on the home). If you’re married and file jointly, only one spouse has to meet the ownership requirement.
- You must have lived in the residence for at least 2 of the last 5 years. This is cumulative, not consecutive. All that’s required is 24 total months, but each spouse must meet the requirement individually.
- You must not have claimed this exemption in the last two years. The IRS calls this the “look back” requirement. If you didn't sell another home during the 2-year period before the date of sale (or, if you did sell another home during this period, but didn't take an exclusion of the gain earned from it), you meet the look-back requirement.
- Eligibility exceptions for a full or partial exclusion: separation or divorce, the death of a spouse, home was destroyed or condemned, you were a service member, work-related move, health-related move, like-kind/1031 exchange, other unforeseeable events.
So, if you're interested in selling or even on the fence, get in touch with a PorchLight agent and request a Comparative Market Analysis. This will show you how much your home is worth today and just how much money you could potentially put in your pocket—completely tax free.