2022 Wrapped

A lot happened in 2022! Before I share the highlights of last year’s market, keep these three things in mind: there are 11 counties that make up the Denver metro area, we'll talk about both attached- and single-family homes, and we’ll round to the nearest thousand for home values to keep things simple.

We started the year off with an average sale price of $628,000 in January. Then we peaked in May at $722,000 and ended the year at $638,000. If we compare that with our peak in May, we're down 11.6%. If we take a step back, though, and look at January 2020 versus our peak in May, we were up 44.6% in total appreciation. If we fast forward to December and compare that to January 2020, we're up 27.8% in total appreciation. 

"We're ahead of projections, which is a great sign."

We're at about 9.3% annual appreciation. That may seem high, but we are seeing values drop and a big part of that is increased inventory. When there's more competition amongst sellers, there are more price drops. In 2022, we started at 1477 active units available at the end of January, peaked at 7683 units available at the end of September, and had 4757 units available in December.

So why the huge increase in inventory? Interest rates play a huge part in this. If we look back to the first week in January of 2022, the national 30-year fixed rate was quoted at 3.22%. Fast forward to the last week in December and we're looking at 6.42%, nearly double what we started the year at. As interest rates rise, purchase power diminishes and many buyers have to bail in the home search process because they can no longer afford a home that works for them.

So why did we see interest rates rise so quickly? A big part of that is the Fed and their continuing hiking of the federal funds rate. In total, we saw seven hikes in 2022 starting in March and ending in December—four three-quarter point hikes, two half-point hikes, and one quarter-point hike.

Hikes were all about inflation but, as we've seen prices on homes and goods and everything else rise over the last few years, so has inflation. The Fed has taken action to slow that down by making it more expensive for everybody to borrow, done by increasing the federal funds rate. Inflation peaked in June at 9.1% and is now down to about 6.5%. Although that's over three times where the Fed wants us to be, we're ahead of projections, which is a great sign. We've already seen the markets start to wake up. 

If you want to learn more about what happened to real estate in 2022 or have any real estate questions, call or email me. I’m always here to help!