We entered 2022 in an intense state of high buyer demand, low interest rates with impending increases on the horizon and very low inventory, which continued the frenzied multiple offers, over-asking price sales and waiving contingencies within the contract gifting homeowners a steep 19.19 percent appreciation from January to April.
In March, the Federal Reserve started raising the base Fed rate to slow the economy as inflation hit a 40-year high. By April, the real estate market started to show signs of slowing as buyers saw the mortgage rates increase, reducing their buying power.
Affordability and market uncertainty caused many buyers to pull back by mid-summer-this was a gift to buyers still in the market, providing an opportunity to negotiate with sellers on the sale price, concessions and inspection items, something they hadn't had the luxury of in years.
Interest rate increases dominated the conversation for most of the year, but the lack of inventory was still an important player. The number of new homes that entered the market in December decreased from November by 35.19 percent; we typically see a decline in new listings from November to December as sellers pull back to focus their time and energy on the holidays. The inventory has gradually increased throughout the year, resulting in homes staying on the mar ket longer before going under contract, not necessarily more sellers entering the market. In December, the median days in the MLS was 30, up from 21 in November and up from five days in December 2021. Year-to-date, the total number of listings in 2022 was 60,164, down 9.30 percent from 2021-this listing count is also less than in 2020, 2019 and 2018. As a result, the total number of closed properties in 2022 was 50,743, down 20.84 percent from 2021.
The increase in interest rates and decrease in buyer demand has impacted home prices. The median sale price for detached homes in December was $600,000, down 2.44 percent from November and 0.01 percent from December 2021. The attached homes also showed a month-over-month decline from $410,000 in November 2022 to $405,000 in December. Compared to December 2021. the median sold price for attached homes increased 5.74 percent. For both detached and attached homes, the peak median sale price for 2022 occurred in April, $680,000 and $440,000, respectively.
This post-pandemic shift back to a more normalized market will take some time. There are many still wanting to buy a home who have not given up and are simply waiting on the sidelines for the market and rates to stabilize. There are many opportunities for buyers in this market; motivated sellers are willing to negotiate on price and inspection items and pay down the interest rate for buyers to make the home more affordable. Sellers must adjust their expectations, know that this market differs from the past couple of years and be patient. Although the median days in the MLS have increased, it is still a good market for sellers willing to prepare their homes and price competitively.
Thank you to our partners at the Denver Metro Association of Realtors for compiling this information.
If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.
