DMAR Real Estate Market Trends Report | JUL. '23
Rain and hail storms did not dampen the Denver real estate market this June. While activity was noticeably slower than last year, buyers and sellers came together to navigate a changing marketplace. Bidding wars were down considerably, with the close-price-to-list price ratio at 100.23 percent market-wide. While some homes are still selling in a weekend with multiple offers, many others are sitting on the market for a few weeks with one or two price reductions before finding a buyer. The days of routinely putting a home on the market and watching it sell to the highest bidder in days are over.
Active listings at month-end steadily increased month-over-month this year, short of a slight dip in February, to 6,070. This is an increase of 16.11 percent from May and the highest the market has seen since 2020. One contributor to the growing active listings is an increased number of deals falling at inspection. Sellers are taking note and willing to work with buyers who are keen to walk from a deal if there are issues with inspection or appraisal.
“Buyers are far more discerning and they want to negotiate and feel as though they are getting a win in a landscape with rates hovering around seven percent and construction costs soaring,” commented Libby Levinson-Katz, Chair of the DMAR Market Trends Committee and Metro Denver Realtor®. “The DMAR Market Trends Committee also reports increased activity at open houses across the city. Visitors, not ready to jump into the market yet, are instead opting out of the rate game and waiting on the sidelines while rental rates are still attractive. The important key here is that there are many would-be buyers out there who will be ready to jump in once rates start to decline.”
With growing inventory and activity slowing, signs indicate a normalizing market, which is great news for buyers who have a bit more control in this market while sellers are less excited. Sellers are learning patience as buyers set the market, and at the moment they aren’t rushing into any decisions.
DMAR’s 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.
This June, the over-million-dollar price point continued to stay competitive. There were 326 closed properties between $1 and $1.5 million, while only 188 closed properties above $1.5 million. Of those 188 closed properties, only 14 were attached properties. Supply and demand are significantly more apparent in single-family detached properties over attached properties. It has been a consistent trend that buyers over $1 million prefer to have a detached property.
Buyers are not paying full price for properties over $1 million, but they’re close. The average close-price-to-list price ratio for properties sold above $1 million is 99.78 percent. Buying with a higher interest rate has slowed down the market, resulting in an increase in days in the MLS, higher month-of-inventory and, surprisingly, the average close price for homes listed for $1 million and above has increased $80,000 compared to last year.
“One of the most interesting observations about the real estate market is how interest rates have decreased the incentive to move,” said Andrew Abrams, DMAR Market Trends Committee member and Metro Denver Realtor®. “Market-wide, there are 23.26 percent fewer properties that have hit the market year to date compared to last year at this time. That is not the case for properties over $1 million where we have only seen a 8.73 percent decrease. The cost of money and the way it flows is simply different for over million-dollar homeowners.”
Overall, there continues to be ample supply, especially proportional to the market as a whole, for single-family detached properties in this price bracket. Attached properties over $1.5 million have a very limited supply, leading to a higher increase in month-of-inventory. As the Denver Metro turns towards a heated-up July, one can expect inventory to slightly increase and demand to stay stable, topping off the end of another Colorado summer.
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