Why Right Now is a Rare Moment of Opportunity for Denver Area Home Buyers
By David Schlichter
Denver has been one of the country’s most rapidly growing cities since 2012, and for much of the last decade, it was very common for Denver home sellers to get multiple offers and have their homes sell the first weekend on the market. The pandemic (and the ultra-low rates that came as a result of it), resulted in even more people moving here--especially those who could earn coastal salaries while working remotely in a place like Denver that has incredible access to the outdoors, an amazing quality of life, and a much lower cost of living.
But as interest rates doubled (and even tripled) from where they had been, the Denver market cooled off substantially. Bidding wars became the exception, not the rule. The gap between the number of homes for sale and the number of buyers buying them got wider, and it is currently wider than it has been in over 10 years. In the Denver metro area, there were 44.9% more homes for sale in July 2024 than there were at the same time in 2023--yet there were 0.9% less closed deals this July than there were a year prior. That means there are substantially more homes for sale per buyer looking right now, and showing activity per listing is down notably accordingly; listings are getting just 5.3 showings per month, on average, which equates to only 1.23 showings per week. More than half of the homes that are selling have dropped their asking price, and homes are sitting on the market for a much longer period of time than in previous years.
The residential real estate market is slow, but this is not just a Denver phenomenon. Whereas national existing home sales typically average around 5.35 million annually (and during COVID increased to about 6 million annually), right now there are only about 4 million existing homes selling on an annualized basis. It is clear that buyers have been deferring purchases they otherwise would be making because interest rates are substantially higher than where they were during the pandemic.
But here’s something you probably don’t know: the Federal Reserve has tracked average 30-year mortgage rates since 1971, and guess what the average rate was over those 53 years? 7.73%. Guess what the average rate was from this past week? 6.46%--almost a percent and a half lower than the 53-year historical average.
The election has been dominating the news cycle lately, so it is understandable that most buyers haven’t gotten the memo that as a result of slowing inflation numbers, cooling jobs numbers, and higher than expected unemployment numbers, 30-year mortgage rates have actually come down 1.34% over the last 10 months and 0.32% in the last month alone. On Friday, Fed Chair Jerome Powell said, “The time has come for policy to adjust…The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” In other words, while the Fed had raised the Federal Funds Rate to a 23-year high, it is now signaling that rates will soon be moving in the opposite direction.
The Denver housing market typically cools off significantly in the fall/winter and then picks back up in the spring. When you pair the timing of the seasonality of the market with the widespread expectation that the Fed will likely be dropping rates at their upcoming meeting(s), there is a convergence of factors that suggest next spring will be a very competitive time for Denver home buyers.
That means that right now (yes, right now), before those more competitive conditions become the new normal again, represents a significant moment of opportunity for home buyers. There are lots of sellers who are very hungry for offers right now, and they are willing to give buyers discounts of tens to hundreds to thousands of dollars off their asking prices to get their homes sold. These are the market conditions that buyers have been craving for over a decade! Once spring comes around, though, those market conditions may be reversed, and the old normal may become our new normal once again.
If you’re thinking about buying and/or selling a home in the near future, our award-winning real estate team would love to help. Please be in touch today to get the conversation started. And if you’re not in the market for a new home any time soon, please pass this article along to anyone you know who might benefit from reading it. We’d love to be helpful to them, too!
[Stats sources: REColorado, ShowingTime, NAR, and the Federal Reserve Bank of St. Louis]
