The Latest From Our Metro Denver Market
Though we’re still in a seller’s market, buyers have some relief on the way.
Two main themes have dominated our market this year: historically low interest rates and historically low inventory.
These themes have caused a swell in buyer demand and a surge in home prices, both in the Denver Metro area and across the country. When will this end, though? Something has to give. Year-over-year appreciation rates of over 20% aren’t sustainable over the long term. In the past few weeks, I’ve noticed a small shift in the market that I wanted to bring to your attention. Only time will tell whether this is a blip or the beginning of something bigger.
Through both the buyer’s and seller’s lenses, we’re seeing fewer showings for homes, fewer offers, and the terms of those offers aren’t quite as good as they have been (although they’re still historically good). Instead of perhaps a $30,000 appraisal gap provision, now you’re only seeing a $15,000 appraisal gap provision.
Inventory is increasing, which is great for buyers because interest rates are still historically low.
Before I go any further, there are a couple of things to note. First, this still absolutely skews to a seller’s market. Second, trends are very specific to market segments (area, price point, amenities, desirables, etc.). That said, this is generally what we’re seeing across the metro area. Contributing factors include the global and local economy. It’s that time of year when people want to travel and take advantage of everything opening back up. We’re also seeing buyer fatigue. People are tired of putting their best foot forward only to lose out on offer after offer.
As far as what’s going on, so much of the answer boils down to timing. We need a bigger sample size to see what this actually is. In the meantime, inventory is increasing, which is great for buyers because interest rates are still historically low (sub 3%). We expect inventory to continue to increase as the national forbearance and eviction moratoriums end. We also believe interest rates will stay low for a while. The Federal Reserve just stated that they’ll make two increases by the end of 2023, but that gives us plenty of time to act.
The bottom line is that whether this is a blip or the start of something bigger, it’s still a relief to buyers. There’s more to look at, and things aren’t as competitive. For sellers, they’re still seeing historically high pricing, but this isn’t quite the frenzy we saw before.
As always, if you have questions about this or any real estate topic, don’t hesitate to reach out to me. I’m happy to help.