Buyers Market Today. Likely to Become Sellers Market in about 30 Days.
December 21, 2023 | denver-housing-market
December 21, 2023 | denver-housing-market
First, happy holiday season to everyone! I hope the next couple weeks is filled with lots of laughter and love, too much food and the annual commitment to getting back in shape!
Real Estate. The 2023 Colorado real estate market has been stable, but slow. Volume of activity relative to the growing Colorado population has been the lowest on record due to the significant rise of interest rates starting in the spring of 2022.
This rise of rates meant fewer buyers and fewer buyers meant less upward pressure on price and more strength in negotiation for buyers. We see this in all the numbers.
Current market conditions have hugely favored the buyer. Active buyers may not be thrilled about interest rates, but they have been serious buyers who need to move, most likely due to life circumstances of job change, babies, divorce, sick of paying increasing rental rates, etc.
Buyers have also been in a strong negotiation position because sellers who are on the market also need to sell. This time of year in particular, sellers who are still on the market (5,729 of them) aren’t having showings during Thanksgiving and Christmas for their entertainment. For many, life circumstances are demanding they sell their home.
The Window of Buyer Advantage is Likely Closing
Interest rates drive buyer activity and as buyer activity increases, sellers benefit from buyers competing with one another.
As we predicted about 60 days ago, interest rates have started to come down, fairly rapidly. Below is a chart showing just the last 75 day movement of a conventional 30 year fixed loan.
Most recently, we’ve had local mortgage banking firms quoting conventional 30 year fixed loans in the low 6% range and VA and FHA loans in the high 5% range (All buyer qualification conditional) with no points. Conventional 30 year rate as of December 21, 2023 is as low as 5.625% with a 1 point origination and 1 point buy down. That is a massive market movement.
We believe rates will continue to come down over the coming months and this will drive more discretionary buyer activity. Meaning, because payment is becoming more affordable, more buyers will enter the market.
As rates decline, sellers will experience more showings, more aggressive offers at or over the asking price, fewer seller concessions and very few price reductions.
We believe this market change will start late January or early February of 2024.
Expect home value appreciation this coming spring.
But, as we always recommend, we want to help you take the time to prepare your home for sale, maximizing its value and equity to you. A well prepared home through a little painting, carpet, hardwood floor cleanup, small handyman projects and staging can impact the price you get by as much as 10%. Other remodeling can improve the price by as much as 25% for homes in need of a facelift.
If you are kicking around selling this spring, let’s have a strategy conversation sooner than later so you are well prepared and know the timeline of work that will best serve your goals.
If you look at the chart below, there has only been one significant time period in the last 70 years where home values have declined. The two years of October 2007 through February of 2011.
The most sophisticated investors in the world continue to buy residential real estate, understanding the profound tax advantages and appreciation benefits.
If you are making a long term purchase, it is simply one of the safest and most valuable investments in the history of our country.
We believe the best time to buy is right now, if life circumstances will allow. We can see that rates are most likely to further decline over the coming months increasing buyer activity and driving prices higher.
Buy right now and you have the greatest negotiating power including the lowest price and greatest seller contributions.
Be ready for a busy Colorado real estate market this coming spring. With a further decline of interest rates, it is likely to be competitive for buyers, and sellers will see solid home value appreciation through June of 2024.
As the Presidential election season gets into full swing, we do expect a decline in market activity to coincide with the traditional Colorado seasonal market slowdown. This will likely being in late June/early July of 2024.
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