Colorado’s Hyper-Local Real Estate

March 5, 2024 | denver-housing-market

Amid ongoing fluctuations in mortgage interest rates and inflation proving to be more persistent and unpredictable than previously expected, we maintain a positive outlook for Colorado real estate. We anticipate a bumpy ride, though declining mortgage rates through year-end, alongside increased market volume and appreciating home values.

However, the Colorado real estate market contains a variability we haven’t seen in some time, thus we are dubbing it a “hyper-local” market.   

The concept of hyper-local emphasizes that market dynamics can significantly differ not only between neighborhoods but sometimes even from one street to another. In this diverse landscape, certain sellers find themselves in a scenario reminiscent of 2021, where properties spend only a few days on the market. These homes attract multiple offers, and drive intense competition among buyers, occasionally resulting in sales prices exceeding the asking price.

Conversely, other sellers face the perplexing situation of their homes lingering on the market, with few showings and no offers, despite diligent preparation and exceptional marketing. This lack of activity may necessitate a reduction in the listing price to spark buyer interest and ultimately still sell for less than the asking price.

The term “hyper-local” also means unpredictable. No specific neighborhood or housing feature can consistently predict which homes will sell swiftly and above asking price, versus those that may linger and necessitate a price adjustment. 

So what should buyers and sellers be committed to this year?  Excellence, flexibility and adaptability.  

This is a market where ‘what your friend did’ or ‘what your dad says’ is irrelevant.  This is a market where we read what is happening in each neighborhood, with each home, each week based on the growth or decline of inventory and rise and fall of interest rates.  

This is a market where professionalism and expertise, are essential.

The Spring Market Has Sprung

Overall, prices are rising, showings are increasing, inventory is climbing, price reductions are decreasing, more properties are going under contract than last year and selling for over the asking price.  

  • Average days on market is 36 and declining.  
  • Average sales price for all property types is $678,126 and slowing rising.
  • Average sales price for detached single family homes is $766,585 and slowing rising.
  • Number of homes for sale is 5,246
  • 28% of properties are selling for more than the asking price with that percentage rising,  and 21.4% selling at the asking price.
  • 33.3% of properties are experiencing a price decrease, and that percentage is declining.  
  • The average home is experiencing only 3.5 showings per week right now, though expect this number to modestly rise.

Price Direction and Speed

While the average sales price year to date is 4% higher than both 2022 and 2023, expect a modest and slow rise of home values through the remainder of the spring.  

In late January of 2022, a 30-year fixed mortgage rate was 3.5%, which drove massive buyer activity averaging approximately 30,000 home showings each week on inventory of only 1,600 homes available for sale.  This supply/demand ratio skyrocketed home values over a unique 3-month period until the market began adjusting to rapidly rising interest rates.  

Today, mortgage rates are approximately 6.5% for the same loan, there are 5,200 homes on the market, and buyer activity is averaging about 15,0000 showings per week. An incredibly different market dynamic from two years ago and thus the market volume and appreciation results we will see this spring are very different.  The upward pressure on prices of two years ago simply does not exist today.  

While prices will increase, they likely will not reach the height of 2022 or 2023, but we also anticipate more price stability, ending the year with an appreciation of the average home between 3 and 6%.

Buyer Guidance

Prepare for a competitive buying landscape, emphasizing the importance of being mentally ready to present compelling offers, showcasing impeccable financing, and understanding that the seller may have greater influence over terms and conditions. We will proactively engage with the listing agent to gauge seller flexibility and identify ways to strengthen your position. Being well-prepared enhances your success rate significantly.

We will analyze each home on which you express significant interest, through the lens of the hyper-local market.  We’ll look at current buyer activity in the area, total homes for sale and the rise and fall of interest rates to determine just how aggressive we can get.  You’ll balance all of that strategy with the subjective answer to the question, “How disappointed will you be if you don’t get this home?”  That will ultimately drive our action.

Seller Guidance

Prepare your home exceptionally to maximize its value and once we go to market, be patient and prepared to analyze feedback and make adjustments to price or condition as needed.  

It may be that your home sells extremely quickly and for over the asking price, in which case we negotiate hard with the top offers to maximize your benefits.  It could be your home is in a hyper-local market that is slower, in which case we aggressively pursue potential buyers and offer compelling reasons why your home is the best fit for them, to minimize days on market and price reductions.  

Either way, we will be prepared by having explored the potential range of outcomes and associated strategies, however, the market responds to offering your home for sale. And with that preparation we will deploy those strategies to meet your subjective goals, while we maximize your home’s value.

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