As average 30-year fixed mortgage rates continue to hover around 6%, there’s an expectation that prices of homes for sale will fall.
It’s only been 10 days since the Fed increased interest rates so it’s too soon to see the impact.
Or is it?
So begins week two of What’s Working’s focus on housing (Missed the first issue? Check it out). There’s still job news below, so scroll down if local housing costs aren’t a concern. See below for … robot jobs!
On Monday, the average list price for a house for sale in Denver was $742,773. Three days later it dropped 2.9% to $721,517, according to multiple listing data provided by Opendoor. Meanwhile, during the same three days, the median closing price fell $26,000, or 4%, to $619,000.
But pay close attention homeowners: The $619,000 price tag in June is still 13.6% higher than median closing prices a year ago in June. And, added a spokesperson for Opendoor, “It’s important to note that the median price hasn’t changed.”
Things are moving so quickly, said Nicole Bachaud, a senior economist at housing site Zillow.
“We had this huge acceleration, this huge boost in spring of 2020 that continued into 2021 that was the strongest year for housing that we’ve really ever seen,” Bachaud said. “Now we’re coming to this period where things are going to cool down really fast as well. And that’s going to look like whiplash for a lot of buyers and sellers in the market.”
However, she added, “the markets are not going to crash, we’re not going to see this huge drop in home values across the board. But it’s gonna look very different than it did in December of 2021.”
And why is that? There’s still demand from consumers to buy a house. Also the number of new homes getting started has dropped off. “What we really need in order to curb this home-price growth is more homes,” she said. “And (would-be) sellers are feeling locked into their current interest rate. If you refinanced at 3%, selling and buying at a 6% rate doesn’t seem like such a good deal right now.”
Price cuts in for-sale houses have been happening for weeks, months and even years in Colorado, according to Zillow data. Even when sales were the strongest last year, there were still houses that cut their price for one reason or another, likely because they were asking too much.
Zillow data for the Colorado Springs, Denver and Fort Collins markets do show that there’s been a sharp increase in the number of houses that cut the list price within the past month. The chart below shows that in early June, 9.17% of the homes for sale in Denver dropped their price in the past month, while 9.1% did in Colorado Springs and 3.37% did in Fort Collins.
Keep reading on Colorado Sun.
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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.
