Our latest real estate stats are out from October, and here are a few key numbers for us in the Denver metro area:
There were 7,290 active listings in Oct, up 115.94% year-over-year.
The number of closed homes was down 40.33% year-over-year.
3,401 homes were pending sale, down 38.78% year-over-year.
The average price of a home increased 8.22% year-over-year to $661,335.
The average days in the MLS for a home jumped from 14 days last Oct to 28 days this Oct, a 100% increase.
The median days in the MLS jumped 240%, from 5 days last Oct to 17 days this Oct.
Instead of homes selling above list price on average (at a premium), the average home sold at a 1.28% discount in Oct.
So what can we expect going forward in our real estate market here in the greater Denver metro area?
Based on the number of pending sales and the downward trend in list/close price ratios and closings, we can expect that for the next month or two, the number of home closings will continue to decline (compared to recent years), we’ll see discounts in price continue (and seller concessions increase), and homes will sit on the market longer. This is also supported by the fact that purchase mortgage applications were down about 42%… back to the same number we saw around this time in 2014! As a result, with less buyers in the market and demand way down, timelines for home sale contingencies will need to increase and generally the real estate process will feel much longer.
As for home prices, the big question is will they go down or not?
With the expected contraction of our economy in the beginning of 2023 and homebuyers all but retreating from the market, it’s a common question. JP Morgan released a report recently which gave an opinion on the direction of price values in major metro areas around the country. While they see some markets like Tampa, Boise, Austin, and New York as overvalued (with the potential for prices to drop 10-30%), they actually see Denver as a place where prices should hold steady based on their analysis. Regarding the fundamentals of the US housing market, they say:
“Despite this potential short-term volatility, the fundamentals of today’s housing market are strong—with sound prospects for the medium and long terms. Even in the short term, we do not expect a dramatic downturn.
Indeed, there is unlikely to be a replay of 2006–2007, when the housing bubble burst. During that period, housing supply far exceeded demand, and the housing sector accounted for an unusually high percentage of U.S. GDP—just under 7%.
Today, housing is a much more reasonable share of GDP, at around 4.5%. Moreover, demand far exceeds supply. According to Freddie Mac, the United States is short 3.8 million housing units that would be needed to keep up with household formation.”
What are some good things happening right now?
Well, for homebuyers, there are quite a few more home options available for you. With home affordability being at a low due to the combo of high interest rates and high prices, competition is low and the ability to negotiate better deals is higher. For those that are able to buy, buying right now is an opportunity – one we haven’t seen in a long time. Ultimately, you’ll need to really dig into the WHY for homeownership or for that big move you’ve been considering. Your WHY may need to transcend market conditions so that you can keep moving toward your life goals. If you’re looking for a new construction home (which my team can you help you with!),this could be a great time too. We suspect the last weeks of the year will have the very best incentives, as desperate builders slash prices to move inventory before year end and meet Wall Street sales count expectations. Let us know if you’d like to go explore new homes! For home sellers, gone are the days of a quick sale and multiple offers with all of the terms you’d like. Now, can you still get a great price and sell for much more than you purchased? It still appears that way! It’s just a different selling experience, one that will require price adjustments, and other incentives to pull in buyers.
If you’d like to discuss the market in your specific neighborhood or the greater Denver area and what that means for you, please reach out anytime. Give us a call or text at 303-929-7844 or reach me at Drew@modernwesthome.com. We want to be real, show you what’s really happening locally (thus not falling prey to any hype or fear-mongering), and ultimately be your trusted guides for real estate. Thanks for reading. Looking forward to talking with you soon!