Denver Real Estate Heads Into the Spring Selling Season
Spring officially kicked off in March and so did the busy season for Denver real estate. Looking at the market as a whole, including both detached and attached properties—month-over-month data shows healthy increases in pending and closed sales. However, sales decreased by 13.37% compared to 2023 and active listings at the end of the month increased by nearly 30% year-over-year.
While some of this might reflect today's interest rates, it's now been two years since the Fed started raising rates. Both buyers and sellers have also had time to recalibrate strategy and expectations. So, the market is likely establishing a new, post-pandemic normal. It's still following the typical pattern of activity increasing in spring, and it will likely peak in early to mid-summer.
What is likely driving today's market is good, old-fashioned inventory.
New listings of detached, single-family homes increased from 2,997 in February to 3,483 in March, a 16.22% jump. They also increased by 16.39% month-over-month in the attached segment (condos and townhomes). At the close of the month, remaining inventory—reflected in active listings—increased in both the detached and attached markets. Detached, single-family homes came in 24.69% higher compared to March of 2023. Attached properties increased by 40.8% year-over-year.
Contributing to these numbers could be the release of the "golden handcuffs." This phenomenon revolves around homeowners who purchased or refinanced at the rock-bottom rates of 2020-2021 and have since resisted selling because they do not want to (or cannot afford to) take on a new mortgage at today's higher rates, especially for comparable or larger properties.
However, according to Libby Levinson-Katzs, Chair of the DMAR Market Trends Committee, things are changing:
"As we head into the warmer months, sellers have resigned themselves to the elevated interest rates and have begun to take the golden handcuffs off. In many cases, these sellers have chosen to downsize. The goal is to sell their home and use the equity in their home to either purchase the next or obtain a signicantly smaller loan. Regardless of their plans, buyers are very happy to see additional inventory."
So, let's see how the rest of the numbers shook out last month.
While new listings of detached, single-family homes increased, buyers responded by going under contract on 3,157 homes, a 32.76% increase month-over-month and 13.52% higher than in 2023. Closings, which primarily reflect homes that went pending in February, rose by 16.14% month-over-month but fell by 8.41% year-over-year.
The average number of days on the market decreased again to 39 which is a 15.22% drop compared to the prior month and on par with the average DOM for 2023.
Last month's uptick in activity caused detached home prices to increase but not by a lot. The median price of $645,000 was just 2.38% higher than February's $630,000 and a normal, healthy 4.03% higher than $620,000 in February of 2023. In fact, since 1991, the average annual home price increase has been 4.3% according to the Federal Housing Finance Agency, so the market is pretty spot on.
And, while active listings are currently on the rise, the Denver market remains well under the 6-months of inventory needed to create a balanced market between buyers and sellers. The only home price point nearing that threshold is the ultra-luxury market of $2M+ properties (5.41 MOI).
As for the attached market, the median price increased from $405,900 in February to $420,000 in March. It also came in 2.69% above the prior year. There were also more new listings, pending sales and closings last month. Year-over-year, however, closed sales were down 25.36% and pending sales were down 6.15%.
Again, the month also ended with a 40.8% increase in active listings. This could be where buyers might find a really good bargain as the busy season hits its stride and competition heats up in the detached home sector.
Looking ahead, prices and pace will ultimately reflect the state of inventory, demand, and mortgage rates. The Fed met again in March, held the federal interest rate steady, and mortgage rates remained elevated. However, the group signaled that they still plan on cutting rates (potentially three times) at some point this year. How this affects buyers will play out in the coming months.
With the market presenting opportunities and challenges for both buyers and sellers, always work with a seasoned real estate advisor who can better assess the market and provide a smart strategy, as well as negotiate and advocate on your behalf. A proven professional will have the experience, connections and resources to help you make smart decisions and achieve your real estate goals. Choose your agent wisely.
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