While it seemed like the Denver real estate market was barreling out of control, we have finally found the brakes to bring this back to a more manageable pace.
In stark contrast from the difficult market we saw in the Spring, the Denver housing market has slowed considerably in the past few weeks. In May, open houses were overrun by home-buyers willing to pay well above the asking price, ignore appraised prices and forgo inspections, just to secure their purchase. In September, open houses were quiet with a few visitors who are more selective and willing to ask for a better deal.
It’s Starting to Feel Normal
What happened to change the market so quickly? It isn’t interest rates. The Federal Reserve decided in September to keep interest rates at their historic lows and make no increases. But don’t count out the effect higher interest rates will have when they do increase – and they will. Just an eighth point increase in rates will take some home buyers out of the market. Like the easy financing conditions several years ago, interest rates are putting and keeping some buyers in the game, but that will certainly change.
The unfettered price increases we saw through the summer have finally made the home buyer cry “uncle”. Instead of the Fed increasing interest rates and slowing the market, sellers have done the job instead. Supply and demand has played out here with high demand pushing higher costs, and thus slowing the market down to a more reasonable pace. Buyers have been pushed beyond their financial ability to purchase, and others know that over-paying today will be a losing proposition when they sell in the future.
Home prices in general have peaked and are now normalizing. Certainly there are other factors that have affected the market, but there is still demand and inventory is still lower than normal. It’s still a seller’s market in Denver. Expect the remainder of the year to remain solid, and 2016 to be a repeat performance of 2015, but to a lesser degree.
Jim Brown is a Realtor® and agent success leader at Private Label Realty in Denver, Colorado. He advises, assists and mentors agents at all levels to help them succeed and grow their real estate business. www.JimBrown.me