Denver Real Estate Consistent with Seasonal Trends
December was another relatively quiet month for the real estate market across the Denver metro. Fewer detached, single-family homes came on the market and fewer listings closed. Days on the market also ticked up as the holidays slowed the number of open houses and showings.
Again, the numbers are pretty normal for this time of year.
Digging into the December data for detached, single-family homes, new listings coming on the market decreased by 26.1% compared to November yet increased by 4.33% compared to the same period last year. And while pending sales also decreased by 5.02% month-over-month, they actually increased by 12.98% year-over-year. This likely reflects interest rates beginning to finally ease.
Still, closed sales were down 7.31% compared to November and 8.78% year-over-year. Days on the market also remained in the double digits (up by seven versus last month) as buyers took their time to shop around.
So, what effect did all of this have on the median home price? With activity slowing, prices came down from $626,550 in November to $613,500 in December. Year-over-year, that's a modest increase of 2.25% but still moving in the right direction for homeowners looking to gain equity.
As for 2023 home prices as a whole, the 2023 year-to-date median home price of $635,000 was lower compared to the 2022 YTD price of $649,900. However, the big picture truly highlights the value of investing in a home. In 2019, the YTD median was $454,500. That means, if you purchased a home just 5 years ago, you're sitting on $180,500 of equity. Talk about a massive return on investment.
One interesting data point that could set the market up for a very busy spring, is the number of active listings still available for sale at the close of the month. In November, there was a 10.32% decrease month-over-month. And in December, active listings decreased yet again—by 26.10% month-over-month.
This decline in inventory, coupled with easing interest rates, could lead to intense competition and higher prices as both buyers and sellers refocus post-holidays. The "x factor" will be how many sellers have put off going on the market due to interest rates. Here's what Libby Levinson-Katzs, Chair of the DMAR Market Trends Committee, has to say about the possibilities:
"If rates continue to decline, I expect to see more buyers enter the marketplace. There has been significant pent-up demand from both buyers and sellers over the last two years who have been interest rate adverse. If demand increases, this will ultimately provide some pressure on home prices. While I do not think we will see the same upward pressure on prices that we saw a few years ago, prices will continue to rise. If demand spikes, inventory will grow throughout the year as sellers find comfort in making a move with more reasonable financing options."
The bottom line? As a seller, you need a seasoned professional agent to guide you through strategy and timing. If you're a buyer, now is the time to not only shop around but work with an agent who will advocate on your behalf and help you maximize easing interest rates.
Homeowners Insurance Coverage Options
There's a lot to learn and understand when buying a home. Once you decide on a new house, submit an offer, as well as deal with an appraisal and inspection, you'll be faced with another task—selecting homeowners insurance.
In fact, to be approved for a home loan, your mortgage company will require you to secure a policy. If you're buying your first home, this is yet another hurdle that might seem a bit daunting. You've never owned a home before, so how would you know what coverage is best?
Even if you're currently an owner, it's always a good idea to review the options and choose a smart, comprehensive policy. After all, your home is often your biggest asset. Here are your typical policy levels to choose from:
- Actual Cash Value – The policy covers the cost of your home and the value of your possessions, minus depreciation at the time of the loss. This will always be less than what it would cost to replace things.
- Replacement Cost – This covers the cost of rebuilding or repairing your home, as well as replacing your possessions without a deduction for depreciation. This allows you to repair/rebuild only up to the original value of your home—like for like.
- Extended/Guaranteed Replacement Cost – An extended policy pays a pre-determined percentage over the limit, typically 20-25%. Guaranteed pays whatever it costs to repair or rebuild even if it exceeds your policy limit.
While a guaranteed policy is the priciest, it offers valuable peace of mind. It means you can rebuild even if lumber costs are high due to supply chain issues. It means that if there's a widespread disaster that causes increased building costs, you'll typically be fully covered. Additional coverage and separate riders can also include:
- Additional Living Expenses (ALE) which reimburses you for certain expenses should your home be destroyed or become uninhabitable due to loss.
- Ordinance and Law Coverage so that your home can be repaired or rebuilt according to current construction codes and industry standards.
- Added coverage for flooding, hail storms, detached structures, high-value items such as jewelry, and water backup or sump pump overflow.
Final tip—read through everything, ask questions, and make sure you understand your coverage, limitations, responsibilities, the claims process, and all that insurance lingo like "peril" and "depreciation."
