Novella Real Estate

A Metro Denver Real Estate Company

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Archives for June 2022

Denver Real Estate Market Update

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The Denver Metro Market is showing a steady increase in inventory, which is resulting in buyers feeling less pressure to make snap decisions. Sellers cannot expect 3 day sales, competing offers, and sale prices over asking prices. It is still very much a sellers’ market, but the velocity of the market has slowed rapidly.
 Having additional options can make the search for your next home easier. But inventory is still low overall, which means your house should still stand out when you sell.
 If your biggest question is where you’ll go if you sell, take this as encouraging news. Let’s connect to start the process today.

Real Estate Market Adjusting

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Denver Real Estate Graph

As the market begins to show an increase in available inventory, it’s important for everyone to recognize that in a “normal” market, houses sell because they are: 

Priced right.

Meaning comparable sales need to be 60 days or less, preferably 30, & sellers cannot “reach” thinking they can squeeze another $10,000 out of the large pool of buyers. The buyer pool is very nervous, & with interest rates exceeding 6%, consumers will need time to adjust to the rapidly increasing mortgage rates. 

Showplace Pretty

Home sellers must prepare their homes to look better than the competition, & accede to at least some of the buyers’ demands after inspection.

The overall market will be fine, as there are more buyers than sellers, but how we prepare our clients for the buy or sell must include a discussion of expectations.

Why is Inventory Increasing?

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Graph of housing for sale in Denver over the years.

As recently as June 2019, after just three long Pandemic-filled years, the Metro Denver residential inventory was 30,000 units, slightly increasing until September of that year and receding until February of 2022 when the cumulative monthly inventory stood at 9,004. The graph demonstrates the sharp decline, with the expected increase in the spring. How does a vibrant market like Denver experience that kind of drop in market vitality? 

1. A presidential election. No matter the outcome, half of the country was going to be emotionally distressed, egged on by a media that makes money in reporting or creating negative information. This distress shows in a population that is often fearful to sell their present residence. 

2. A Pandemic. Starting in March of 2020, the United States, along with the rest of the World, began the long, slow slide into a Pandemic economy. While available inventory was reasonable in the spring of 2020, the drop was perceptible as people continued to respond to the effects of the health crises. People that could buy a home did so, creating panic buying, while many homeowners became very cautious in protecting what they had. 

3. Inflation. For the first time in many years, American citizens began to feel the effect of increasing prices and, as we moved into 2022, sharply increasing interest rates. Only now are we seeing inventory increase as home buyers are becoming skittish in response to rising mortgage rates. 

4. A raging war in Europe. The United States has increasingly become engaged in a proxy war with Russia, supplying Ukraine with both lethal and non-lethal material to defend against Russian aggression. While the war seems a long way off, some people are beginning to get nervous about the possible impact on or to the United States. 

5. The combination of the above, along with various regional and employment stability issues, have served to reverse the buying spree that was evident during the height of the Pandemic. It is uncertain today if the rise in inventory is the result of normal spring increases, or portends a more serious reversal in the home sector.   

Source of Graph: REcolorado