via Denverite

By Sarah Mulholland | Published on February 4, 2023

Home prices in metro Denver, the largest housing market in Colorado, are falling as rising interest rates continue to cool demand.

But prices aren’t collapsing and are still high enough to shut a lot of buyers out of the market. Last month, the median price for a home in the area – which includes Boulder and Broomfield – was $536,000, down 3.33% compared to December, according to the latest report from the Denver Metro Association of Realtors. That equates to a decline of roughly 1% from the same time last year.

The housing market in Colorado – and across the U.S. – has been sliding for months as the Federal Reserve hikes borrowing costs in its fight against inflation, pushing mortgage rates to the highest in more than a decade. That chills sales by making monthly payments higher. Still, prices are up by double-digits when compared to pre-pandemic levels.

In fact, realtors say the market picked up a little bit in January.

“Buyers are back in the market with bidding wars being reported again, much to the delight of sellers,” Libby Levinson-Katz, a Denver realtor and chair of DMAR’s market trends committee, said in the report. “[Buyers] have wrapped their heads around higher interest rates … and are simply taking their time to find the right home.”

One of the factors propping up home values is the chronic lack of houses available for sale in and around Denver. Not enough new houses are being built  to keep up with demand. At the same time, people who locked in low mortgage rates in recent years may decide to stay in their current home rather than taking out a new mortgage with a higher rate, further reducing the number of homes for sale.

There were 4,120 active listings in the area at the end of January, the data show. While that’s more than double the amount of homes on the market last January, it’s not a lot by historical standards. To put that number in context, there were a record-high 24,550 homes for sale during the teeth of the financial crisis in 2008, and a record-low of 1,184 last year.

But all hope isn’t lost for buyers. Homes are sitting on the market longer. A home that sold in five days last year will likely be sitting on the market for a month or more this year. That means buyers should have more room to negotiate on things like inspections and price cuts.

One clear trend is a preference for single-family homes. Attached properties, which includes duplexes, are taking longer to sell and seeing bigger price declines across all price ranges.