Just how slow is the Denver real estate market?

In a word… very. In fact, there haven’t been so few closed sales since March of 2017. Why is this summer so quiet?

For starters, home buyers face some of the highest mortgage rates in 20 years, pushing their potential monthly payments higher. On the flip side, 62% of homeowners have a mortgage interest rate below 4%. 23.5% have a rate below 3%. Homeowners are going to have a tough time selling and getting a new mortgage with a rate twice as high.

So how are buyers and sellers winning in today’s market? And how is Q4 and beyond looking?

Supply’s Subtle Retreat

New listings for single-family homes saw a decrease of 26 percent, while townhouse-condo properties experienced a 19 percent decline year over year in July. But there’s been just a 15% drop in closed sales.

That tells us there’s still more demand than supply, just significantly less of both compared to 2021 and 2022. The end result is upward pressure on price, down just half-a-percent from 2022. Buyers in the market have accepted that we will not see a massive drop in prices and that waiting with everyone else for rates to drop will simply mean they would enter a very competitive buying pool.

Smart, Methodical Buyers

Instead, buyers are enjoying significantly reduced competition from a year ago. They’re asking and getting repairs after inspections. They’re asking and getting sellers to pay for closing costs and interest rate buy downs. They’re not having to come up with tens-of-thousands of dollars above asking in cash at the closing table.

On the flip side, they have less homes to choose from and will have a higher monthly payment than desired for the home they want. But these buyers know that refinancing is an option when rates come down. And they will eventually. Some lenders are even offering credits toward refinance costs right now.

Unlike the last few years, buyers are taking their time. In 2021, buyers were purchasing property after a ten minute FaceTime Showing. Now, they’re going back twice. Taking their time to make sure it’s a good fit. Frankly, it’s the way buying a home should be. There’s no telling how much longer it will last though.

Patience is a virtue for sellers

Sorry. No more battles to the death over your home. Buyers are not interested in bidding wars right now. In fact, if your home needs lots of work, your pricing had better reflect that. Otherwise, you an expect crickets at your listing.

The good news is, home prices have not taken a nosedive. So chances are you’re still sitting on a pile of equity. But put yourself in a buyer’s shoes. aA properly priced and thoughtfully marketed home will attract showings and offers. But be patient, metro wide, homes spend 32 days on average on the market right now. Chances are you’re going to have several weeks of showings.

Predicting the Unpredictable

Predictions for Q4 are a tricky affair. Historically, it’s a quieter period for Denver real estate thanks to the holidays and changing temperatures. But these aren’t ordinary times. So many buyers (and sellers wanting to be buyers) are waiting for rates to drop to make a move.

It seems unlikely that rates will make a significant move in the coming months. So for those who can work with the current interest rate environment, there could be some real deals to be had at the end of the year. More of the same.

But, if rates do drop, it could be an unusually busy Q4 with buyers getting off the sidelines, competing to make a move before 2024.

Final Thoughts

It appears unlikely that prices will drop in a market-changing way, if at all. Rates are holding strong until the federal government can get control of inflation. The question those thinking about jumping into the market have to ask themselves is, what can I control?

The market of today and the market of tomorrow present a different set of benefits and challenges. They work differently for each household depending on everything from finances to life changes. So come up with a strategy now and strike when the time is right for you!