The Denver Real Estate Market in July 2023
With summer vacations in full swing and high interest rates persisting, the total number of new real estate listings (both detached and attached) that went on the Denver market in July dropped by 24.8% compared to the same month last year. And 18.5% fewer homes closed as well.
Taking a closer look at just detached, single-family homes, new inventory decreased 26% year-over-year and 16.7% compared to the prior month.
Accordingly, and despite fewer homes going pending or closing last month, the median price remained relatively stable at $650,000. June came in at $655,000 which means there was a slight dip in July. But prices were flat compared to 2022—and we've typically seen 2023 prices well below the prior year. It goes to show that inventory does make a difference no matter the season or other factors.
This lack of inventory will likely continue as 91.8% of mortgages in the U.S. have interest rates under six percent and 82.4% are under five percent. Even if a current homeowner is no longer happy with their home, buying a new home at today's higher rates isn't exactly appealing.
According to Libby Levinson-Kaths, Chair of the DMAR Market Trends Committee, the Denver real estate market is still primarily a seller's market and buyers are becoming more creative in order to achieve their goals:
"Buyers who do not need to sell to purchase their next home are looking at 2-1, or other temporary buy-down programs, to help alleviate interest rate woes...Buyers are more confident offering under the list price and asking for seller concessions to help buy down their nterest rate even for new homes hitting the market. Consequently, seller concessions increased from 29.2 percent last June to 48 percent this June, averaging $7,295. This may be the best time to buy in recent history as buyers can finally negotiate after enduring years of a strong sellers market."
With financial tools available and more leverage, the Denver market saw 2,852 listings go pending last month—down month-over-month and year-over-year but not significantly. Days on market increased from 7 to 9 month-over-month, so the market is moving along. Just at a slower pace.
Looking at attached homes, such as condos and townhomes, the median price of $420,000 remained flat between June and July, but increased 2.9% year-over-year. There were 1,401 new listings and 1,098 closed listings. July also ended with 1,702 properties still available for sale, an increase of 1.9% compared to June.
While Denver real estate slowed for the summer, fall is coming fast and we typically see a slight rebound in activity once September arrives. With an expert to provide guidance, buyers still have plenty of room to negotiate and explore their financial options right now. Looking to sell? Make sure you have an advocate to make prevent or minimize the need for concessions that might hinder your return on investment.
Interested in a Mortgage Rate Buydown?
As a buyer, you’re likely worried about affording to buy right now. If you’re a seller, you may wonder how rates will impact your ability to sell quickly and without having to drop your asking price. While rates will come down eventually, there are financial tools available to help you now.
One option is a mortgage rate buydown where a lump sum is paid upfront to temporarily (or even permanently) lower the interest rate, and thus reduce monthly payments, during the early years of a loan.
A popular option is a 2-1 Buydown that lowers interest during the first two years of the loan term. The rate increases from one year to the next until it reaches its permanent rate in year three.
Based on a 30-year loan for $400,000 with a fixed interest rate of 5%, the buyer would pay an interest rate of 3% the first year, 4% the second year, and 5% from years 3-30. At the original 5%, the buyer would have a payment of $2,147.29. Here are the savings from a 2-1 Buydown.
*Principle and interest only.
Pros and Cons to Consider If You're a Buyer
- May qualify for a higher loan amount
- More affordable payments at the start
- Seller can pay the buydown for you
- Offsets new home ownership costs
- Allows time for income increases
- Can possibly refinance without penalty
- More predictable than an ARM
- Out-of-pocket cost if the seller won't pay
- Income doesn’t keep pace with increases
If you're selling your home, offering a buydown can help you incentivize and attract more buyers as soon as you go on the market. That can even lead to selling your home faster. It can also net you a larger profit versus a dropping your selling price. On the flipside, the buydown fee must be paid at closing, so you'll see that money come out of your profit.
Other options include a 3-2-1 Buydown and a permanent buydown. You can read more about them here, or get in touch with your PorchLight real estate agent to discuss further. They can also connect you with trusted financial professionals who can bring even more financial tools to the table!