The number of listings in the Denver-metro area rose like a rocket in June, fueled by rising interest rates and quickly appreciating home values in recent months.
The number of homes on the market increased an eye-catching 65.85% from this May to June and 94.01% from June 2021 to June 2022, according to the Denver Metro Association of Realtors’ (DMAR) monthly report. There were 6,057 homes for sale in June, nearly double the number of homes available at the same time last year (3,122).
“Inventories are rising because significantly higher mortgage rates and higher home prices have priced many would-be home purchasers out of the market,” notes the Denver Post.
Rising mortgage rates took many buyers by surprise. Some began looking for homes earlier in the year, then decided to wait until the competition for homes slowed down. They now face the reality that higher mortgage interest rates have lowered their purchasing power significantly.
Meanwhile, sellers are seeing their homes stay on the market longer, and price reductions are becoming more commonplace.
The shift away from a frenzied market — in which bidding wars and buyers waiving inspections were common—was so pronounced that the DMAR report advises real estate brokers to drop the price of a home “if you haven’t received an offer after 20 showings.” It also suggests brokers call buyers who left the market earlier, noting that “Now is a great opportunity to find a new home without competing in many scenarios.”
That doesn’t mean, however, that average sale prices are dropping. The cost of attached homes in the Denver metro area set a new record in June, at an average of $504,193. The average cost of a single-family residential property (detached homes and condos) was $719,210, a rise of 12.11% over last year.
Andrew Abrams, chair of the DMAR Market Trends Committee, predicts that this won’t last. The increase in supply will eventually “impact pricing, days in the MLS (Multiple Listing Service) and the relationship between buyers and sellers… Housing will eventually be a victim of the economy as a whole. Just how much is yet to be seen,” he notes.