Market Update November 2023

HAPPY THANKSGIVING!

It’s Not Good or Bad…. It’s Just the Market

My managing broker always says, it’s not a good market, it’s not a bad market, it’s just the market. A lot of people think waiting for the market to do what they want it to do is the best option but there are lots of reasons that isn’t always true.  

1. Home prices continue to rise. Average home prices in the Denver Metro area increased 3.3% this October compared to last October and with low inventory, they don’t appear to be going down anytime soon, so waiting will only cost you more.
2. Interest rates are fluctuating slightly but they aren’t making any dramatic changes and it’s probably going to stay that way for awhile. Also, interest rates aren’t permanent. Buyers can always refinance down the road if interest rates do drop.  We are seeing many builders including more builder incentives on their homes that they need to sell by year end and many builders and sellers are buying down interest rates for buyers.  
3. Another thing to keep in mind is that when interest rates do drop, you will see a lot more buyers in the market bringing more competition which always drive prices up even more.
4. The 4th quarter is a great time to be looking for deals in the market with sellers wanting to be out of their home before the holidays.
5. Think about your home and its features, the location and how it does and doesn’t meet your needs. Your home might be just fine but on the other hand, it also might create more stress than what it is worth. Life is short. For example, if you aren’t able to see your grandkids very often because you are too far from them, then think hard about whether the extra dollars you are saving are worth it or if you are spending a lot of weekends and money maintaining an aging home, do the math and decide if it’s really makes sense. Just something to think about. 

When I first started selling real estate in 2010, we were just coming out of the great recession and many sellers just didn’t have any equity in their homes which made it hard for many to sell. That definitely isn’t the case today. Today, sellers have plenty of equity thanks to Covid. If Covid never happened, we wouldn’t have had the housing demand we had and prices wouldn’t have increased as fast as they did. This has created a huge benefit for homeowners that purchased prior to Covid.

• If you purchased prior to Covid, you are in a great position since you more than likely have lots of equity in your home which gives you more money for a down payment or to pay points to buy down your interest rate. You can still ask for seller concessions on your new home to help you buy down the interest rate as well. 
• Average days on the market for listings is still less than a month. We are definitely still in a sellers market but buyers are being more selective with their home purchases.
• If you can find a home that has been on the market for awhile, sellers might also be willing to allow you to make a contingent offer before putting your house on the market, although I would still highly recommend that your house is ready to go so you can get it on immediately.
• If your home is lacking in a few areas, it may be harder to sell in this market so you might want to advertise buyer incentives when first going on the market to bring more buyers as soon as you list and make sure to stage your home to make it look as good as possible.

The point of all of this is that waiting isn’t always the best option and there will always be a market that isn’t ideal for a specific seller or a specific buyer but you just have to get creative with your real estate agent and figure out how best to make it work for your situation.

If you want to discuss your specific situation, and how I might be able to help you get into your next home, please don’t hesitate to reach out.

I HOPE YOU HAVE A WONDERFUL THANKSGIVING!

MARKET STATS

(Source: MLS: Arapahoe, Denver, Douglas & Jefferson counties)

OTHER STATS

• • New home sales soared nationally in September, up 33.9% from last year.
  • Many new builds have incredible year-end incentives such as permanent rate buydowns, all appliances and landscaping included packages.
  • During the 1st 3 quarters of 2023, new housing permits decreased 22.1% compared to 2022. Fewer than 16,000 permits have been approved through the end of September, down from more than 20,000 last year.
  • In Q3, 31% of U.S. single-family homes for sale were new construction – the highest share of any Q3 on record.
  • Buyers seem to be writing more “contingent” offers on homes they want to purchase, even before their homes are on the market. With days in MLS increasing significantly, accepting these “contingent” offers is becoming more difficult, creating a dilemma for both buyers and sellers.
  • Goldman Sachs forecasts a 1.3% appreciation nationwide for 2024, along with a drop in closed transactions from 4 million to 3.8 million as interest rates remain at or above 6.8%.
  • Colorado has the 4 most expensive U.S. cities that aren’t on the coast, with Boulder leading, followed by Denver, Fort Collins and Greeley.
  • Evictions are on the rise in Denver as pandemic assistance comes to an end, with a projected rate of more than 12,000 eviction filings by year’s end — the highest since 2008.
  • Downtown commercial office space vacancy has hit 30% for the first time in decades, with vacancy rates surpassing 20% in the 1st quarter of 2021 due to the pandemic.
  • In an effort to create more affordable housing, the White House and U.S. Department of Housing and Urban Development (HUD) announced a new initiative to encourage the conversion of commercial properties into residential units, with $10 billion in funding allocated for this purpose.
  • Despite a surge in construction, Colorado is short over 100,000 housing units and affordable housing options remain limited.
  • Work from home rates have returned to pre-pandemic levels, with fewer than 26% of American households having someone work from home at least 1 day per week. The peak of 2021 saw 37% of households..

Source: Denver Metro Association of Realtors