It’s been an interesting year so far in Denver real estate. Inventory and prices are up. Interest rates and sales have trended down. But even with the changes in a shifting real estate market, it’s still safe to say the market is strong and weighted towards the seller.
Interest Rates and Affordability
In 2018 it looked like interest rates were finally on the rise and the historic lows were going to be a distant memory. However, the Feds pulled back on projected rate increases, re-opening the re-finance market for lenders, and helping buyers afford more house for the same dollars. There is now talk that the Federal Reserve may drop rates a quarter point in July.
While lower interest rates help with buyer affordability, home prices have continued to rise. On the higher end, above $500,000, seller asking prices have risen every month this year, but actual sale prices have consistently fallen short. On the lower, more affordable side of the market, prices have also shown a monthly increase, but buyer competition has kept sale prices equal to asking.
The Hot Part of the Market
Detached single family homes under $400,000 remain the hot commodity in the Denver market. Statistically, the asking price and sale price remain the same, meaning buyers are willing to do what it takes to get the home they want. Additionally, based on location and price range, multiple offers are still alive and well. Buyers in sought-after neighborhoods are competing for the same properties, and in some cases up against fierce competition.
Interestingly, the real buyer competition is with the detached, single family homes, and not the lower priced condominiums and townhomes. Detached, single family homes under $400,000 are selling at or slightly above asking price, whereas condos and townhomes under $400,000 are selling for slightly under listed price. A clear distinction between the two types of property.
Here Comes Summer!
We are in the height of real estate season in Denver. May and June traditionally have the most listings and sales activity of the year. Looking ahead, the summer should stay busy, but begin to slow heading into the fall. Unlike the past few years under an extreme seller’s market, this year the expectation is to see inventory continue to edge upward. Even with continued low interest rates, the market will likely slow, especially at the higher price points.
This is good news for buyers. More choices and perhaps lower prices are in sight. Yet for sellers, this isn’t terrible news. Today we remain in a seller’s market. The shift is taking us closer to a normalized market, yet still not tipping all the way into the buyer’s favor. It is a place where buyers are able to purchase at a reasonable pace, while sellers are able to sell relatively quickly and still get the equity from their property.