Inventory of homes in the Denver metro area surged in April—along with prices.
The spring home-selling season took off in April, with new listings sprouting throughout the Denver metro area. But the market also brought groundbreaking news: The average cost of a detached single-family home reached a whopping $825,073.
That’s according to the monthly report from the Denver Metro Association of Realtors (DMAR), which noted that several factors are currently affecting the market.
Inventory rose significantly in April, to 3,204 active listings for residential properties. That’s a 44.26% increase over March and 23.52% more than last year at this time.
This rise in the number of homes for sale may be easing demand slightly, but current inventory is still a drop in the bucket compared to the average number of active listings for April (since record-keeping started in 1985) of 14,596.
The larger influence on demand seems to be rising mortgage interest rates. DMAR notes that the 30-year fixed rate for a Freddie Mac loan increased almost a half point last month, from 4.67% to 5.10%. This means higher monthly payments and a significant jump in the cost of the home over the life of the loan.
The rate increase has resulted in a slowdown of the competitive frenzy of recent months.
“[T]he velocity of bidding wars is slowing down,” notes the DMAR report. Additionally, home showings decreased in April, with 9.7 showings per home after Easter weekend compared to 25.6 showings per home after Super Bowl weekend.
Buyers are also less likely to make extraordinary concessions to sellers. “In the chaos of the recent market, buyers had been waiving their inspections, doing full appraisal gaps and even offering to make their earnest money non-refundable before getting an inspection,” writes Andrew Abrams, chair of the DMAR Market Trends Committee. “Now, we are shifting to a more responsible market. There will still be bidding wars, appraisal gaps and limited inspection items on future properties, but the frequency of those will be less.”
Even so, homebuyers face significant challenges for the foreseeable future.
“Higher interest rates… likely helped slow home sales in metro Denver last month, and the number of listings available is surging,” notes a recent article in the Denver Post. “But when it comes to calming those gale-force gains in home prices, the windows are still rattling something fierce.”