DMAR Real Estate Market Trends Report | DEC. '24
2024 began with optimism; mortgage interest rates would stabilize and start a slow decline, inflation would subside – allowing the Federal Reserve to reduce the federal funds rate, and buyers and sellers would re-enter the market. In reality, interest rates had a bumpy ride throughout the year and the Federal Reserve did not ease rates until the third and fourth quarters of the year. Mortgage rates responded temporarily with the first-rate drop but gained no benefit from the second and third reductions; this sends the market into 2025 nearly where we began in 2024, with rates in the high six percent range.
“Elevated interest rates have lasted longer than anticipated, and historically low rates of three percent are no longer realistic moving forward,” commented Amanda Snitker, Chair of the DMAR Market Trends Committee and Metro Denver Realtor®. “Buyers have needed time to adjust to the affordability factors associated with the higher rates and increased home prices.”
Total inventory in the market for 2024 increased 12.60 percent over 2023 but still lagged compared to 2020 through 2022. Most of this increase came from detached homes, while attached homes saw only a slight uptick. The number of detached homes sold increased 7.84 percent year-over-year. Attached homes had a decline in year-over-year sales of 15.51 percent and a 45.90 percent decrease from 2021. As we begin 2025, the market has more inventory than in recent years, giving buyers a wider variety of choices - although many of these homes have been sitting on the market for a while. The median days in MLS for active listings is 78 days, compared to 40 days for properties that sold in December. Overall, this means buyers have an excellent opportunity to negotiate before the start of the spring market when buyer demand will increase.
This year, median home prices for attached and detached homes saw differing trajectories. Detached homes followed a typical annual price increase cycle in the spring and tapered off into the 4th quarter, showing a slight upward trend and ending the year up 2.28 percent. Attached homes ended the year with a median sale price of $407,000, a decrease of 1.93 percent year-over-year. The attached market has had a unique set of circumstances to contend with. HOA dues have increased an average of about 37 percent in the Denver Metro Area since 2020; increases in insurance and repairs costs have strained HOA budgets.
Commented Snitker, “We are over two years into an environment with mortgage rates over six percent with no meaningful change on the horizon. Buyers and sellers have had to adjust to the market, and in tracking mortgage applications and pending contracts with slight drops in the mortgage rates, we know that buyers are watching and waiting, and buyer demand remains cautiously high. Sellers, locked into the golden handcuffs of a historically low fixed-rate mortgage, are finding themselves unable or unwilling to postpone life changes, resulting in more inventory entering the market. While mortgage rates are not the only factor affecting market activity, they are the element that could bring about the most significant shift.”
Overall, DMAR is entering 2025 optimistic, knowing the environment will continue to change with economic and political shifts.
Our monthly report also includes statistics and analyses in its supplemental markets that include properties sold for $1 million or greater, properties sold between $750,000 and $999,999 and properties sold between $500,000 and $749,999.
Activity in the $1+ million market showed that this market is a marathon, not a sprint. 4,949 detached properties were sold in 2024, compared to only 330 attached properties, a 19.51 percent increase for detached properties and a 32.10 percent decrease for attached. That marks a dramatic shift compared to the previous year.
Summer remained the most active time to sell a house, influenced by the school calendar. Buyers of a property over a million dollars saw that the average price for a home would be $1.610 million. Whether looking at top sales or average sales prices, the over $1 million market continues to see significant financial activity.
There were 652 more sales over $1+ million than the previous year. While these buyers could purchase at a higher sales rate compared to the previous year, not every component of the market was strong. The average days in MLS increased by 25 percent, the close-price-to-list-price ratio decreased to 98.17, and the number of homes on the market at year-end increased by 17.89 percent compared to the previous year. These stats perfectly summarize the year: there were more $1+ million buyers, but homes sat on the market longer and sold for less than full price.
“Simply put, buyers in 2024 preferred not to share a wall with their neighbors,” commented Andrew Abrams, DMAR Market Trends Committee member and Metro Denver Realtor®. “As 2025 begins, the market is starting with more inventory, giving buyers continued negotiation power. Assuming interest rates remain relatively steady with slight decreases throughout the year, it’s likely that most stats in 2025 will parallel those of 2024. For sellers, patience, timing and realistic expectations will be imperative. Buyers should adopt a similar mindset: be patient for the right house, know that summer months will bring more inventory and competition, and be realistic about the potential to negotiate on price and inspection items.
Highlights from December closed transactions include the highest-priced attached home at 355 Clayton Street, which sold for $3.75 million, and the highest detached sale at 890 South Milwaukee Street in Denver, which sold for $7.7 million.
Additional monthly Mortgage Market Trends Insights are brought to you by The Rueth Team Powered by Movement Mortgage, the Exclusive Partner of the Denver Metro Real Estate Market Trends Report.
Learn more about our partner here.
