seasonal slowdown met by high rates in Denver housing market
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By Jessica Gibbs | Published on October 6, 2023
Inventory in the Denver metro region housing market is growing, and although that indicates slightly more choice for buyers in a tough market, demand is also softening, according to a recent real estate report.
A typical seasonal slowdown in sales is being met with mortgage rates approaching 8%, local realtors say, keeping buyers on the sidelines and homeowners who landed record-low rates from listing.
The monthly Denver Metro Association of Realtors Market Trends report was released this week, offering a look at September’s trends. The Market Trends report covers the 11-county metro Denver area, including Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park.
The median sale price for houses and condos grew 0.69% to $585,000, which was a year-over-year increase of 0.86%. Sellers were securing 99.19% of their listing price, a 0.27% decrease from August but a year-over 0.31% increase.
Of note, properties sat on the market for an average of 30 days, a 15.38% increase from August, when properties took an average of 26 days to sell.
The number of active listings in September rose by 11.24% from the previous month to 7,629. That was about 0.7% lower than September of last year. The month saw 4,589 new listings, nearly 6% less than what hit the market in August. The number of new listings also showed a 12.6% decrease from what the market saw this time last year.
Concession requests from buyers have been on the rise since the beginning of the year, and that trend held up throughout September, according to the report. Concession requests have been key to buyers navigating the tricky market, DMAR Market Trends Committee Chair Libby Levinson-Katz said in a news release.
“Buyers and sellers continue to find common ground in this market and people are moving every day for a myriad of reasons,” Levinson-Kats said.
First-time homebuyers who aren’t holding tight to low rates are leading new loan applications, Levinson-Katz said.
The number of homes sold last month fell by 20.88% from August to 3,175 and plummeted 28.22% year-over. Sales volume fell 20.38%, from roughly $2.76 billion in August to $2.19 billion in September. September’s sales volume showed a 25.97% decrease from last year.
DMAR member Lydia Lin of ONE Reality told The Denver Gazette she watched multiple listings fall out of contract last month as buyers either got cold feet or struggled with financing.
“Also, there are a lot of people offering rate buydowns, which I hadn’t seen in a long time,” she said.
The first half of September proved busy and she had “a good amount of listings,” but business slowed in the last two weeks, she said blaming high mortgage rates for keeping sellers at bay. Lin has taken to describing the market as fickle.
“You just don’t know. It used to be much more predictable,” she said.
The Denver 100’s Andrew Malkoski has also given up on predicting how market pressures will play out, especially when it comes to mortgage rates.
“There are too many moving parts, from government policies and quasi-government agencies and Wall Street investors, that there just does not seem to be any clear path for what our future looks like,” he said. “Until these different market forces starts to calm down, I don’t know how anybody can honestly predict where we are going to be in three, six, 12 or 24 months.”
Malkoski, who is not a member of DMAR, concurred with some of the trends in the association’s monthly report.
The seasonal slowdown has arrived, although the “small fall pop” that might typically occur during September and October appears quashed by the high rates, he said.
“The major trend is that certainly, days on the market and months of inventory elongated in most micro-markets,” he said.
Rates continuing to climb as fewer buyers enter the pool will keep creating “more and more time on the market for sellers.”
“We don’t see a ton in the way of value degradation in homes right now, but what we are seeing on the back end that we don’t see reported so much is the fact that many buyers are getting concessions,” he said.