As the Denver Real Estate Market continues to evolve and change with the weather, the question on everyone’s mind is: Are we in a buyer’s market?
Traditionally, a market with less than three months of inventory is considered a seller's market. In direct relation to that, a market with more than six months of inventory is considered a buyer's market-meaning that the sweet spot of three to six months of inventory is defined as a balanced market. This is a helpful benchmark to define our current market, which is undoubtedly changing. Currently, the $100,000 to $199,999 and $1 million and over segments for detached homes are pushing the three percent threshold, with 2.75 percent and 2.62 percent, respectively. The $1 million and over segment for attached homes is at 2.83 months of inventory. Using months of inventory as a metric indicates that we are moving toward a balanced market.
Buyers are joyful as they are finally gaining power regarding their real estate purchases. They can now take time to find the right house and negotiate the purchase price, inspection-related repairs and appraisal values. This additional time is great news for buyers who have been stripped of their negotiation power over the last few years as sellers were firmly in charge of the very robust, COVID-19-fueled seller's market. While interest rates are higher than they were at the be ginning of the year, some buyers are getting accustomed to the increased rates and are utilizing available marketplace tools. Conventional conforming loan limits are now $715,000, up from $647,000, which has helped some buyers con sidering the average close price of a home is now $745,947. With bidding wars subsiding and appraisal gap coverage becoming a thing of the past, other buyers are looking at VA loans. Conversely, jumbo loans are an attractive option as they offer a lower interest rate than most conventional products.
For many sellers, it feels as though the rug has been pulled out from underneath them. Price reductions are on the rise, while active listings at month end rose 10.72 percent to 7,683. Pending sales declined 15.41 percent for both detached and attached homes month-over-month, which is a direct relation to a 6.38 percent decline in sales volume month over-month. While the market is shifting for sellers, it's never been more important to price conservatively for a quick sale. Overpriced homes are positioned for price reductions, whereas homes that are priced conservatively still sell quickly, often in the first week on the market.
To answer the original question, I believe we are moving toward a balanced market, which we haven't seen in over 16 years. A traditional cycle for the Denver real estate market is seven years. Due to an economic crash and a global pandemic, the cycles were extended, but a correction is needed. The market is entering a period of neutrality where the bullish ways of extreme markets make way for a stage of compromise, with buyers and sellers working together for a win-win experience.
West + Main agent Nick DiPasquale dug further into the Premier Market (properties sold between $500,000 and $749,999).
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.
