March 2022 real estate showed that despite increased inventory, there is no sign of a market cooldown anytime in the near future.
With a large increase in month-end active and new listings hitting the market, a slight seasonal shift will positively impact buyers who have started to feel fatigue in the residential market. At the same time, current homeowners continue their unprecedented growth in equity.
With a historically high average sales price of $705,812 and increased interest rates, many buyers who saw their potential monthly payments drastically increase received a sign of reprieve. Month-end active inventory went up 81.16 percent from February to March. The additional 995 new listings on the market at the end of the month also served to slightly aid the balance of supply and demand. While the percentage increase is substantially higher, having such low initial numbers yield a higher percent change. Along with the 43.57 percent increase in new listings, this will serve to help balance the accelerated price appreciation the market has recently seen.
“Earlier in the year, buyers offered six figures above the asking price while competing with dozens of offers,” commented Andrew Abrams, Chair of the DMAR Market Trends Committee and Metro Denver Realtor®. “With the recently increased inventory, it is more common to compete with just a few offers. Although competition has loosened, the residential real estate market has always been slow to react to change. Even with only a few competitive offers, it’s become standard for buyers to come in very aggressively on offers, making the other offers start at an elevated price and terms. With record-high sales prices, interest rates increasing north of 4.5 percent and an average close-price-to-list-price ratio of 106.46 percent, the monthly mortgage of a traditional buyer has never been higher.”
The Denver market currently sits at 19.88 percent appreciation compared to last year. While waiting may create more options, it does not guarantee more value. Last month alone, the average sales price increased 9.02 percent at $58,418. The market continues to move forward rapidly, just not as fast as the past couple of months, and the decreased speed will be felt in the coming months, creating the allure of more balance.
Our monthly report also includes statistics and analyses in its supplemental “Luxury Market Report” (properties sold for $1 million or greater), “Signature Market Report” (properties sold between $750,000 and $999,999), “Premier Market Report” (properties sold between $500,000 and $749,999), and “Classic Market” (properties sold between $300,000 and $499,999).
Meanwhile, in the Luxury Market, buyers saw the largest rise in inventory of any price point. House hunters in the $1M+ range felt some relief from the historically tight market with a 58.22 percent increase in the detached market and a 60.53 percent increase in the attached market for the number of homes available for purchase from February.
Even with the rise in inventory, bidding wars persisted, with luxury homes going an average of 7.66 percent over list price. The average luxury home price increased 7.8 percent month-over-month, as it has done since the beginning of the year.
“Offers of $300,000 over asking price were not uncommon, with one home we know of closing $600,000 over list price,” said Colleen Covell, DMAR Market Trends Committee member and Metro Denver Realtor®. “The dramatic escalations in prices of expensive homes may intimidate some buyers, leaving them feeling that the market is reaching its peak, and they should pause their search in hopes that prices will stabilize. But sellers need to stay grounded in their pricing strategies as buyers can sense when a house is priced too high, even in this hyper-charged market. We are seeing sellers get carried away with the price frenzy and end up losing out.”
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.
