Selling Your Home in Denver: 2023 Real Estate Market Update

Welcome back to our real estate update for 2023. In this blog post, we're going to be discussing the latest developments in the market and what it means for buyers and sellers in the Greater Metro Denver area.

2022 Market Recap

2022 was a year of records and surprises for the Denver real estate market. The year began with a significant decrease in inventory and a surge in buyer demand as interest rates started to rise. In April 2022, the average single-family detached home sold for $819,090, but by the end of the year, the average sales price had dropped to $701,949. Despite the slowdown in the market, the overall appreciation for the year was still historically high, with an average sales price growth of 11.6%.

Price Reductions and Compression Cycle

In December, sellers who were serious about selling their homes began to offer price reductions. 59.4% of detached single-family homes closed with price reductions averaging -7.8% from their original list price. The last time we saw price reductions on this scale was in December of 2010. The Denver housing market has now entered a Compression Cycle, where there are more buyers in the market than homes to sell them. This imbalance between supply and demand is causing multiple offers on properties, especially when the Predictive Months Supply of Inventory drops below 1.0 months.

January Market Trends

The real estate market in January showed both positive and negative trends. The 65% increase in new listings is a positive sign, but the 13% decrease in active inventory at the end of the month suggests a tight housing market. The high percentage of homes being paid in full and locked in under 5% suggests strong demand for homes. However, the 3.3% decrease in home prices from December and the lower "close to list" ratio indicate that there may have been some negotiation opportunities for buyers.

Shifting Negotiation Advantage

As the year progresses and the housing market becomes more competitive, it seems that the advantage in negotiations has shifted from buyers to sellers. With 45 showings and 10 offers, sellers are now in a position to negotiate on their terms. Pending transactions for February 2023 showed that the Median Days on Market dropped to 16, meaning that if a home is priced right, shows well, and is correctly positioned in the market, it goes under contract in just over two weeks.

Conclusion

In conclusion, the market continues to shift from the hyper-market pandemic years into something that more closely resembles the market cycles of 2013-2019. Until interest rates come down, it's unlikely that we will see price increases in the Greater Metro Denver area. With more buyers in the market than homes to sell them, it's a good time to be a seller, but buyers need to be prepared to act quickly and be ready to make an offer.

Low Interest Rates and Listing Availability

Another factor to consider is the low interest rates that sellers are enjoying. Many of them simply don't want to give up these rates by moving, which has led to a decrease in listing availability. In fact, December 2022 saw a 40% YoY decrease in the number of listings.

Declining Affordability and Construction

The housing market has also been facing declining affordability, as construction has not been able to keep up with the sky-high demand. There's an estimated shortage of 100,000 units to meet the demand, and previous polls have shown that only 15% of homeowners would be willing to sell if interest rates rise above 6%.

Stay Informed and Adapt to the Market

As you can see, there are a lot of different factors at play in the current market. It's important to stay informed and understand the current trends and how they may impact your own real estate goals.

Contact Us for Assistance

If you need to talk about how you can get the most for your home, or get the best deal, please give us a call at 303-746-7504. Our team of experienced real estate professionals are ready to help you navigate the Denver real estate market and achieve your goals.

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