The busy season officially arrived and Denver's real estate market posted strong numbers in March. Like February, new listings of detached homes saw big gains, coming in at 4,507 properties. Pending sales, which are homes that went under contract, also jumped by 43.25% month-over-month and 17.90% year-over-year.
However, closed sales still lagged slightly behind the 2024 figure and the number of active listings at the end of the month remained elevated. These 6,197 listings still on the market at the close of March showed a 57.12% increase compared to the prior year (3,944 active listings).
According to Amanda Snitker, Chair of the DMAR Market Trends Committee, here's insight into why:
Higher interest rates and affordability challenges have had the most significant impact on the market shift. In 2020, the average interest rate for a 30-year fixed mortgage was around 3 percent and remained in that range until the spring of 2022. when rates surged to about seven percent by year-end-where they have largely remained This sharp increase in borrowing costs has slowed buyer activity, even as inventory has grown.
So, even though the busy season has been busier compared to activity during the holiday season and winter months, there's more balance in the market due to high inventory and higher rates keeping the buyer pool limited.
Here's more on what's happening:
Prices are tempered. The median price for detached, single-family homes was $660,000 last month, an increase of just 2.72% compared to the prior year median of $642,500. - There's more time to shop around. On average, it's currently taking 46 days to sell a home, giving buyers ongoing latitude to be selective instead of rushing their decision. While that's down by 8 days compared to the prior month, the sales timeline has increased by 15% year-over-year.
- Buyers can negotiate better terms. What the data doesn't show is that price reductions are more common, as well as sellers offering or negotiating incentives such as mortgage rate buydowns and concessions—covering closing costs, attending to repairs, offering credits, etc.
Basically, if you're even thinking about buying, and can look past rates, there are clear advantages to coming off the sidelines right now. There are numerous ways to offset higher rates up front, as well as the ability to refinance down the road when rates eventually ease.
Just keep in mind that this is not entirely a buyer's market. Stronger sales and even a few bidding wars are still happening in desirable neighborhoods and for homes that are updated, move-in ready, well-staged, and properly marketed. Competitively priced homes are also receiving more attention from buyers.
Looking at attached properties, such as condos and townhomes, new listings increased while pending sales jumped from 808 in February to 1,077 in March. That's also 3.06% higher than the prior year.
What may be getting everyone to the closing table is the median price. Whether to offset mortgage rates or HOA dues, prices in this segment are coming down. The number for March was $389,000 compared to $399,990 the prior month and $415,000 the prior year.
Still, active listings increased from 3,013 in February to 3,567 in March and by 87.24% compared to 2024.
Even with the typical busy season hitting its stride now, especially with spring break interruptions behind us, it appears that buyers will continue to have the ability to negotiate and take their time to shop. It would take a big decrease in mortgage rates or a mass absorption of inventory to change market trends. Right now, neither are in the forecast.
If you plan on making a big move in the coming months, your first step is to discuss buying or selling goals with an experienced professional. Your agent can better advise you on the market and provide a smart strategy. A proven professional will also have the skills, connections, and resources to help you achieve the best possible outcome.
Choose your real estate agent with care and make sure you have proven, expert representation.
Why Now Is a Good Time to Buy
In today's market, buyers have more homes to choose from and more time to search for the right one. They can perform inspections, complete their due diligence, and potentially negotiate the price and terms. Other indicators that now is a good time to buy a home:
- You’ve found a great house and can comfortably afford both the mortgage and expenses that come with a home—taxes, maintenance, etc.
- You plan on being in the home for a while. Equity is typically gained at a rate of 3.5-3.8% annually. That won’t be the case every year, but that’s the historical average.
- You understand that mortgage rates change and you can potentially refinance to a better rate down the road.
- You work with an experienced agent who can potentially negotiate home repairs, seller concessions, even a mortgage rate buydown. They can also connect you with reputable loan professionals who offer the best rates and home loan options.
The Best Possible Mortgage Rate
If you’re stuck on today’s higher rates, keep in mind that your finances can have a big impact on the rate you get and the loan options that will be available to you. Areas to focus on include:
- Credit Score: As we all know, the better your score, the better your rate. So, check and repair your credit. Investigate and fix anything suspicious or inconsistent. To reduce your debt, determine what you can pay off quickly and keep revolving credit balances low.
- Debt-to-Income Ratio: DTI is monthly debt obligations (such as credit card payments, but not grocery costs or entertainment) divided by your gross income. Mortgage and home costs should be no more than 28% of your gross income, and once everything is calculated, your total DTI should be no more than 36%.
- Down Payment and Loan Amount: Buyers who pay more upfront are considered less risky by lenders and just need to borrow less. That usually leads to a better interest rate. In today’s market, sellers are better preparing their homes and are often more willing to negotiate repairs and concessions. You could potentially put more cash into your down payment instead of holding funds back to do work on the home after buying it.
Bottom line? Yes, it’s a good time to buy if you have your books in order and the right agent by your side. If you’d like to discuss your goals with a PorchLight advisor, feel free to contact us using the form on the right.
