Denver Real Estate in 2024: A Story of Resilience and Revival

The real estate market in Denver has been nothing short of resilient. Despite 2023 being one of the slowest years in sales in the last decade, the drop in home values was a mere 1.7% compared to 2022 in the Denver Metro area. To better navigate 2024 (don’t miss the strategies below) it’s important to understand the dynamics that shaped Denver's real estate market in 2023.

The Highs and Lows of Mortgage Rates

In late October 2023, the 30-year fixed mortgage rate peaked at an astounding 7.79%, a figure not seen since November 2000. This surge led to speculations reminiscent of the 2008 housing market crash, with fears of a dwindling buyer pool and anticipated drastic price drops by sellers. However, the reality unfolded differently.

The Seller's Standpoint

Contrary to expectations, most homeowners chose not to sell, except for necessary reasons like relocation or changes in family size. This decision was largely influenced by the low mortgage rates they had locked in during the previous years. The thought of swapping a low, sub 3-percent rate for a potentially double or triple monthly payment deterred many from listing their homes. This national trend was reflected in the National Association of Realtors' latest report, which noted the lowest number of U.S. existing home sales since 2010. In Colorado, this translated into an extremely low supply of inventory.

The Buyer's Journey

Despite the high rates, a significant number of buyers stayed active in the market. People still need housing and many were unable to secure a home during the intense buyer competition from 2020 to 2022. These buyers faced less competition, and real estate agents often negotiated deals on behalf of buyers that include "rate buydowns,” sometimes alongside price reductions, to facilitate purchases with more reasonable monthly mortgage payments. This approach helped prevent the market from tipping too far off balance, preventing plummeting prices resulting in just a 1.7% decrease in home values in the Denver Metro area in 2023.

A Look at the Numbers

It's remarkable to note that this slight dip comes after years of over 30% increases in home prices. Now, we’re seeing a steady decline in interest rates, with forecasts from industry experts, such as the Mortgage Bankers Association, predicting rates in the low 6's for 2024. Some are predicting even lower and in turn the market is showing signs of loosening. Real estate offices in Denver are buzzing with activity, indicating a potential rise in new listings, a welcome sign for buyers, still hungry for a home.

What This Means for Sellers and Buyers

For sellers, the market remains lucrative, with little sign of significant price declines in most zip codes. Put pricing remains a crucial step of listing one’s home. Don’t take Zillow’s word for it. Real estate agents are reporting discrepancies between “Zestimates” and real values of 10% in some cases. In 2023, overpriced homes languished on the market, becoming subject to bottom feeders and low-ball offers.

Similarly, marketing is a whole new ball game. Throwing up iPhone photos on the MLS and hoping for the best should be a thing of the past. Agents with a solid grasp of new age marketing (video, social media, floor plans, drone photos, etc.) will “make your listing famous” and generate the most views on your listing, and in turn, the best offers.

Buyers, on the other hand, might face increased competition due to limited inventory and a slowdown in new construction. However, the softening rates offer a silver lining. It's important for buyers to focus not just on the price but on the overall monthly payment, exploring various financing strategies with a knowledgeable agent and lender.

In Conclusion

The Denver real estate market's resilience in 2023 sets the stage for an interesting 2024. For both buyers and sellers, navigating this market will require insight, strategy, and the right professional guidance to make the most of the opportunities ahead. Whether you're looking to sell at a great price or buy with an advantageous financing plan, the key is to stay informed and well-advised.