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Greater Denver Area Real Estate Market Report from November 2024

 
 

November brought a unique set of challenges, according to the Denver Metro Association of Realtors’ Market Trends Committee.

The first two weeks included the release of the employment data report, a presidential election, the Federal Reserve meeting and the consumer price index report. Each of these events introduced market volatility. While many consumers may not track these data points as closely as we do, they can still feel the uncertainty and fluctuations in consumer confidence.

With challenges come opportunities. Buyers in this current end-of-year market are finding gifts on a level rarely offered. Of the homes sold in November, about 50 percent had at least one price reduction before going under contract, and roughly 60 percent of the sellers provided concessions to buyers, many in the form of interest rate buydowns or repair credits.

November also saw a month-over-month decline of 16.54 percent in properties that closed or went pending, which declined by 10.54 percent. This is not surprising given the month's complexity and the increase in mortgage rates, which returned to the seven percent range.

Heading into the holiday season, we have seen a decrease in the number of new listings entering the market, which is typical this time of year. A decrease of 40.38 percent for attached homes and 41.90 percent for detached month-over-month allowed buyers to absorb some of the inventory, resulting in a 14.90 percent decrease in the active listings at month's end compared to October. Although inventory declined month-over-month, November saw an increase of 57.08 percent in attached homes and 32.01 percent in detached homes year-over-year. This presents opportunities for buyers to take advantage of higher inventory and reduced competition during the winter months.

Although inventory remains higher than in 2023, the median sale price for detached homes increased by 1.90 percent compared to November 2023. Attached homes saw a slight decline of 1.20 percent over the same period.

Through November 2024, 54,006 new listings entered the market, an increase of 12.84 percent from 2023. However, the total number of new listings still lags compared to recent years; through November 2020, 66,947 new listings had entered the market. The total number of sold properties in 2024 reached 39,153, a slight 0.31 percent from 2023 but a significant 32.83 percent drop compared to year-to-date 2020.

By the end of November, active inventory totaled 9,310 properties, with 3,022 properties closing during the month. These figures closely resemble November 2013, when 9,352 properties were on the market and 3,661 properties closed. Looking back, many buyers would describe 2013 as a favorable market, even though it came with its own challenges, such as a 7.4 percent unemployment rate and the lingering effects of the Great Recession.

While today's market challenges differ, opportunities remain for those who seek them. Whether buying or selling, every client faces unique variables, and it's our role as advisors to help them uncover the opportunities in each market and maintain perspective.

Learn more about the market from the Denver Metro Association of Realtors.

Thank you to our partners at the Denver Metro Association of Realtors for compiling this information.

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This factor can get your mortgage application denied — even if you’re a high earner

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If you need to get a mortgage to buy a house, make sure your finances are in order — especially your debt to income ratio.

Your debt-to-income ratio is all your money debt payments divided by your gross monthly income. It’s the “number one way” lenders measure your ability to manage the monthly loan repayments, per the Consumer Financial Protection Bureau.

The debt-to-income ratio was the most common reason for a denied mortgage application, at 40%, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors. 

Other factors that affected homebuyers in the approval process were a low credit score (23%), unverifiable income (23%) and not enough money in reserves (12%), the report found.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024 and found that 26% of homebuyers paid all-cash — a new high.

Lenders look for a ‘healthy’ debt-to-income ratio

Repeat buyers who gained record home equity in recent years drove that trend, according to the NAR.

But for those who need to borrow in order to buy, lenders and institutions look at your debt-to-income ratio to see if you may struggle to add a mortgage payment on top of other debt obligations.

“The higher your debt-to-income ratio is, the less chance they’re going to feel comfortable lending to you,” said Clifford Cornell, a certified financial planner and associate financial advisor at Bone Fide Wealth in New York City.

It’s a factor that affects home applicants of all income levels, said Shweta Lawande, a certified financial planner and lead advisor at Francis Financial in New York City. 

“If you’re a high earner, you might not experience an issue saving towards a down payment, but that doesn’t mean you have a healthy debt to income ratio,” she said. 

Here’s what you need to know about your debt-to-income ratio.

How to calculate your debt-to-income ratio

If you’re looking to apply for a mortgage, the first step is to know what your current DTI ratio is, said Lawande.

Take your total required monthly debt payments, like your monthly student loan or car loan payment. Divide that sum by your gross monthly income, she said. Multiply the result by 100 and you have your DTI expressed as a percentage.

A DTI ratio of 35% or less is typically considered as “good,” according to LendingTree.

But sometimes lenders can be flexible and approve applicants who have a debt-to-income ratio of 45% or higher, Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender, recently told CNBC.

A way to figure out your housing budget is the so-called 28/36 rule. That guideline holds that you should not spend more than 28% of your gross monthly income on housing expenses and no more than 36% of that total on all debts.

For example: If someone earns a gross monthly income of $6,000 and has $500 in monthly debt payments, they could afford a $1,660 a month mortgage payment if they follow the 36% rule. If the lender accepts up to 50% DTI, the borrower may be able to take up a $2,500 monthly mortgage payment.

The ‘better’ debt repayment strategy

You can improve your debt-to-income ratio by either shrinking your existing debt or growing your income.

If you have existing debt, there are two ways you can work to pay it off, experts say: the so-called “snowball method” and the “avalanche method.”

The snowball method is about paying off the smallest debt balances first no matter what the interest cost is, which can feel less overwhelming, said Shaun Williams, private wealth advisor and partner at Paragon Capital Management in Denver, the No. 38 firm on CNBC’s 2024 Financial Advisor 100 List.

“One is what’s best on a spreadsheet, and the other one is what makes someone feel best from a behavioral finance standpoint,” Williams said.

Yet, “the avalanche is better because the true cost of debt is your interest rate,” he said, as you’re more likely to pay down the debt faster.

Let’s say you have student loans with a 6% interest rate versus an existing credit card balance accruing a 20% interest rate. If you’re sitting with credit card debt, consider tackling that balance first, Cornell said.

“Whichever one’s costing you the most to borrow is the one that you want to pay down as quickly as possible,” he said.

If you’ve already done what you could to either consolidate or eliminate existing debt, focus on increasing your income and avoid other large purchases that would require financing, Lawande said.

“The goal is to just preserve the cash flow as much as possible,” she said.

Read more at CNBC

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Make Your House the Top Thing on Every Buyer’s Wish List This Season

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With the holidays right around the corner, homeowners planning to move have a decision to make: sell now or wait?

Some may even consider taking their house off the market until next spring. But is that the best choice? Because at this time of year, your home can really stand out.

Here’s the thing: there are plenty of buyers out there who want to be in a new home by the holidays, and your house might be just what they’re looking for. As an article from Redfin says: 

“. . . there is typically less inventory in the housing market this time of year, allowing your home to easily stand out among the available inventory. And though there are technically fewer buyers overall, the homebuyers that are looking are far more serious about finding a home within a specific timeframe. . . selling your home during the holidays might be your best present this year.”

Here are four key reasons you may not want to wait to sell your house.

1. Serious Buyers Are Looking Right Now 

The holiday season doesn’t put a pause on the desire to own a home. Sure, some buyers might delay their search until next year, but others have a reason they need to move now. These buyers are highly motivated and ready to make a serious offer. As Investopedia says:

“Anyone shopping for a new home between Thanksgiving and New Year’s is likely going to be a serious buyer. Putting your home on the market at this time of year and attracting a serious buyer can often result in a quicker sale.”

2. You Have an Inventory Edge

While there are more homes coming to the market right now, overall, the number of houses available to buy is still low. 

So, what does that mean for you? If you work with a trusted agent to price your house right, it could still sell pretty quickly. That’s because today’s buyers are on the hunt for quality options – and your home may be exactly what they’re searching for.

3. You Have Control Over Your Showings 

Selling during the holidays doesn’t mean constantly disrupting your schedule. You have the flexibility to set up showings at times that work best for you. This is especially helpful during a busy season, and many buyers are likely to be more flexible with their schedules since they often have extra time off around the holidays.

Now, it’s always better to offer more flexible access to your house. But the reality is, you don’t have to stop the process entirely – especially when you have a great agent to help you navigate each step along the way.

4. Holiday Décor Can Make Your House Shine

For many buyers, a tastefully decorated home can create a warm, inviting atmosphere. It’s easy for them to imagine holiday gatherings and cozy nights in a space that feels just right. Keep your choices simple to let your home’s charm shine through. An article on holiday home-selling advises:

“If you’re selling around a holiday and have decorations up, make sure they accent—not overpower—a room. Less is more.”

Bottom Line

There are plenty of good reasons to put (or keep) your house on the market during the holidays. Reach out to a local real estate agent and see if this is your moving season.

Read more like this at Keeping Current Matters

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Denver just legalized ADUs citywide. How many could be built?

 
 

The Denver City Council just made it a lot easier to build accessory dwelling units, or ADUs, in neighborhoods across the city.

The biggest change: Homeowners won’t have to get a rezoning before building a cottage or other accessory dwelling. The change could result in a few hundred more ADUs being built each year, one study found.

"We are in a housing crisis and this is a good step towards combating the issue,” said Councilmember Darrell Watson in an interview with Denverite. 

It’s the city’s biggest step yet in a mission to encourage ADUs. Over the years, the city passed laws to encourage ADU construction in individual neighborhoods. But this new law applies to every single-family neighborhood in Denver.

“The new zoning will allow for 70 percent more of the city to build accessory dwelling units so that anyone who wants to have their parents, grandparents, or children to live with them,” Watson said.

It’s part of a statewide effort to get housing built. A recent state law requires Denver and dozens of other cities to loosen the restrictions on ADUs. The council vote was unanimous. Public comment was overwhelmingly positive, with all speakers supporting passage of the bill. Some, like Andy Cushen, said living in ADUs makes Denver more affordable for both homeowners and renters.

“It made an opportunity for me and my husband to buy a home in the city we love,” Cushen said. 

The new law takes effect Dec. 16, 2024. People who want to build ADUs will still have to get construction permits and obey design rules. But as long as property owners meet those standards, it doesn't matter what the neighbors think. Other changes include removing requirements that owners live on the same property as their ADU.

How many Denver ADUs will be built?

Denver might see 200 to 300 new ADUs per year. That’s according to former city councilmember Robin Kniech, a housing expert who recently studied ADU reforms nationwide.

“This is good news for neighbors who are worried about if they're going to see a flood of these everywhere all at once. That's not what we're seeing in other cities and states. They're too expensive, too challenging to build,” she said. “It's a slow but steady supply. And once that home is built, it's there for a hundred years or more.”

However, Kniech warned it’s hard to predict how many ADUs really might get built. She based her estimate on outcomes in other places like California and Washington. If Colorado can match the same results as California’s long reform efforts, it might see 3,500 new units statewide per year. Overall, she said, it will be only a subtle difference for Denver and other cities. Denver has permitted roughly 500 new ADUs over the last decade.

Other cities and states have seen notable increases after passing similar laws. Seattle saw its rate quadruple, to more than 500 each year, after passing reforms.

What will ADUs cost in Denver?

One of the biggest obstacles is cost. 

A new ADU can cost more than $300,000 to build. While the Denver law change will reduce some of the headache and bureaucratic costs, it won’t do anything about those construction costs. However, there are some options to reduce those costs. The state’s new ADU law made about $13 million available through grants to cities and housing authorities to help with ADUs.

The city also has similar local efforts. The WDSF+ ADU Pilot Program offers pre-designed floorplans and financial assistance for some homeowners. 

Denver still may be missing one state requirement

The city law allows some neighborhoods to have larger setbacks, which is the required distance between an ADU and property lines. State law says that cities shouldn’t require setbacks of more than five feet between ADUs and the property line. But Denver says it needs bigger buffers, especially in areas without alleys. Councilmember Paul Kashmann worried that the state would try to force the city to accept smaller setbacks. 

“What I'm wondering is if the state says too bad, so sad … what's our penalty?” Kashmann asked. 

He asked city legal staff if they could preemptively take action against the state to argue that the legislature overstepped its boundaries in mandating a five-foot setback maximum.

“The city could keep the zoning regulation that doesn't comply with the state,” assistant city attorney Adam Hernandez said. “Ultimately there could be some sort of action brought and that's just how it would play out. The courts would ultimately decide.”

What cities in Colorado have to allow ADUs now?

The new state law applies to all cities with a population of more than 1,000 that are also part of a metropolitan planning organization, or MPO. Almost 70 towns and cities are subject to the law, including dozens along the Front Range, as well as Grand Junction and some nearby municipalities.

Read more at Denverite

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How Co-Buying a Home Helps with Affordability Today

 
 

Buying a home in today’s market can feel like an uphill battle – especially with home prices and mortgage rates putting pressure on your budget.

If you’re feeling stuck, co-buying could be one way to help you get your foot in the door. Freddie Mac says:

“If you are an aspiring homeowner, buying a home with your family or friends could be an option.”

But there are some things you’ll want to consider first. Let’s explore why co-buying is gaining popularity right now among some buyers and see if it may make sense for you too.

What is Co-Buying?

Co-buying means buying a home with someone like a friend, sibling, or even a group of people. And, with today’s high home prices and mortgage rates, it’s an option more people are turning to.

According to a survey done by JW Surety Bonds, nearly 15% of Americans have already co-purchased a home with someone, and another 48% would consider doing it.

Why Consider Co-Buying?

The same survey also asked people about the perks of co-buying a home. Here are some of the top responses (see graph below):

Sharing Costs (67%): From saving for a down payment to managing monthly payments, buying a home is a big financial step. When you co-buy, you split these costs, making it easier to afford a home.

Affording a Better Home (56%): By pooling your financial resources, you may also be able to afford a larger or higher-quality home than you could have on your own. This may mean getting that extra bedroom, a bigger backyard, or living in a more desirable neighborhood.

Investment Opportunity (54%): Co-buying a home can also be an investment. You could buy a house with someone so you can rent out, which could help generate passive income.

Sharing Responsibilities (48%): Owning a home comes with a lot of responsibilities, including maintenance and upkeep and more. When you co-buy, you share these commitments, which can lighten the load for everyone involved.

Other Co-Buying Considerations

While co-buying has its benefits, there’s something else you need to consider before deciding if this approach is right for you. As Rocket Mortgage says:

“Buying a house with a friend or multiple friends might be a great way for you to achieve homeownership, but it’s not a decision you should make lightly. Before diving in, make sure you understand the financial and logistical hurdles you’ll face, as well as the human and emotional elements that might affect the purchase or, more importantly, your relationship.”

Basically, make sure you and your co-buyer are on the same page about things like how costs will be split, who will handle what responsibilities, and what will happen if one of you wants to sell your share of the home in the future. Leaning on an expert can help you weigh the pros and cons to make that conversation easier.

Bottom Line

If you're looking to get your foot in the door but are having a tough time at today's rates and prices, co-buying could be an option to make your move happen. But, it’s important to plan carefully and make sure that all parties are clear on the details. To figure out if co-buying makes sense for you, connect with a local real estate agent.

Read more like this at Keeping Current Matters

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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.

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