We've been preparing you for a potential shift in the real estate market, and that shift has now begun. We're getting lots of questions from our past, current, and prospective clients about what the implications are for them, so we definitely encourage you to read the market update in this newsletter to get up to speed. If you've been thinking about selling and/or buying a home in the next 12 months, please be in touch so that we can discuss your unique situation and make a customized plan for you.
By David Schlichter
The start of 2022 was the best time in history to sell a home in the Denver metro area. Generally speaking, new listings were selling for well above the asking price with multiple offers more often than not. While market conditions are still incredibly strong for sellers, a shift in market conditions is underway. The market is experiencing a decrease in offers per listing, lower closed price to original price ratios, increased days on market, and significantly more price reductions.
Much of this is a result of rising interest rates. At the end of 2021, the average interest rate for a 30-year fixed rate mortgage loan was 3.11%. Five months later, the average interest rate for the same type of loan has increased significantly to 5.27%. As interest rates rise, buyers' purchasing power declines.
Source: REColorado, using data for all property types (residential), April 2021 and April 2022.