While the Denver-metro home market of 2022 started at a feverish pitch – with record-low inventory fueling frenzied competition for homes – that fever broke by year’s end, with the market settling down to more normal temperatures.
That’s the news from the Denver Metro Association of Realtors (DMAR), which recently released its monthly statistics for December 2022. They show a turnaround from the trends that began 2022.
Last year’s home market opened in a frenzy, as inventory hit a new historic low, with a scant 1,184 homes for sale in January. Buyers competed fiercely for those homes, waiving inspections, offering to cover any gaps between the home’s cost and its appraisal, agreeing to free post-closing occupancy periods and making other uncommon concessions. One real estate broker noted that a client offered $140,000 over a home’s asking price, only to be outbid by another buyer offering around $190,000 over the list price.
By December, however, such frantic bidding was a thing of the past, with homes taking longer to sell, prices moderating and sellers reluctantly stepping out of the driver’s seat.
Last month, homes remained on the market for an average of 43 days, a 26.47% increase over November and 19 days longer than last December. This gave buyers the breathing room to view homes more leisurely and negotiate terms. Now, the DMAR report noted that, “motivated sellers are more willing to negotiate on price and inspection items and pay down the interest rate for buyers to make the home more affordable.”
Vice Chair of the DMAR Market Trends Committee Amanda Snitker noted in the report that the market began to shift in March, as the Federal Reserve tried to dampen a 40-year-high in inflation by raising its base rate. “By April,” she wrote, “the real estate market started to show signs of slowing as buyers saw the mortgage rates increase, reducing their buying power.”
This increase in interest rates undercut demand and “impacted home prices,” noted the report. Average residential closing prices dipped 2.69% from November to December, to $637,852.
The market hasn’t completely settled into normalcy. “The post-pandemic shift back to a more normalized market will take some time,” Snitker noted. But it’s well on its way.
“With things starting to feel more normal in the market and buyers and sellers winning on both sides, many of us are grateful for how things ended in December and we’re cheering for a fabulous new year,” said Brigette Modglin, DMAR Market Trends Committee member.