Larry McGee

The Denver area market showed very strong sold/closed statistics in April of 2022. The slowest market in the extreme southwest Metro Denver area zip code of 80135 showed 11.92 weeks of inventory, at an average sold price of $2,465,375, while the most aggressive was the Lowry area zip code of 80230, averaging $1,588,571 with no standing inventory. 
Out on the limb prediction: May closings will show a slight slowdown, as the pace of pending contracts slowed in April. 

The external factors of higher interest rates, strong inflationary issues in the fuel and agricultural sectors, and the uncertainties stemming from the Russia/Ukraine war will act to slow the housing market. But be aware that slow does not mean stop. The population demographics that are pushing the market have not changed, and will not until late in this decade. We simply have more needs than available products. 
Out on the limb prediction: The housing market will begin to level, with slight increases and decreases on a month-to-month basis. Prices will stabilize over the balance of 2022. The predictions from economists and the many market observers offer a wide swing in predictions regarding interest rates, inventory, builder starts, and any other overall market segment remotely related to or dependent on the housing market. As one of the observers, I am taking the conservative middle ground based on the overall need for housing by the expanding Metro Denver population, at least for the remainder of 2022.

Let’s consider the chart and quoted rates. First, the residential mortgage market has increased by 2% points since Christmas of 2021. If we add in the quoted points, the rate today for a 30-year conventional mortgage is 5.35 to 5.5% depending on lender and credit scores. We are seeing prices of everything we buy, especially food and disposables going up sharply, with the Federal Government showing an 8.5% inflationary jump in the past 12 months.

Why?

A combination of things that our popular media has difficulty explaining, but the majority is the trillions of Federal stimulus money created to provide relief for the effects of the pandemic. If money is created without economic support, then the result is inflation, which reflects in the price of everything. Energy policy limiting the future of petroleum products, or shifts in import volume contributes, and there is some effect based on the ego-driven war in Ukraine. Of course, easy money and a lack of housing inventory has worked to push housing prices beyond any reasonable expectation, but that has been a slowing rolling train wreck over a period of years. Increased family formation coupled with a lack of product forces prices higher, in some cases at bank-breaking levels.

Will things get better? Of course, but it will get worse before it gets better, and it will take a while. The United States has to recover from the shock of too much money and increase our production output to compensate. We will leave that problem to the nice economists to explain.