Serious Buyers, More Sellers and Prices are Up

As anticipated earlier this year, interest rates dropped, leading to a modest increase in real estate buyer activity. However, the release of the producer price index inflation report in early February caused a market reaction and mortgage rates climbed. Although the recent rate increase suppressed buyer activity, buyers that are active are serious, aggressive and fueling rising prices.

Price

The average purchase price in the Denver market through mid-march of this year hit $715,515, $53,000 higher than the same time last year and slightly below the same time in 2022.  With higher interest rates, slower buyer activity, and strong seller activity, price increases will likely level off over the next couple months.  

Sellers

We anticipated a 15% increase in market activity this year and thus far, 14.9% more sellers have hit the market compared to 2023.  In fact, if we had to draw a conclusion, we’d say that year to date 2024 looks more like 2022. 

We doubt we will see a spike in seller activity like 2022 however, with interest rates in both years being the determining factor.  In 2022 we saw an unprecedented spike in seller activity driven by rising interest rates.  Many consumers who wanted to move to a different home jumped to the market to capitalize on rates while they were low.

Today, more than 70% of households still have a very attractive interest rate below 4%.  These homeowners will not give that rate up without a very compelling reason.  We anticipate only a modest increase in seller activity throughout the spring selling season, unless interest rates drop markedly.

Buyer Showings, Under Contract Properties and Days on Market

Buyer showings look anemic year to date compared to the height of the pandemic where we experienced 40,000 buyer showings in a week.  But, it’s silly to compare our more normal 2024 to wildly abnormal years.   

Comparing the 2024 real estate market instead to 2018 and 2019, which we previously predicted it would resemble, we observe that buyer showings are 21% below the average of those years. 

While interest rates are higher than we anticipated this year, suppressing buyer activity about 20% below expectations, buyer activity remains strong and steadily increasing, gobbling up the majority of the home inventory that hits the market.  

Modest early in the year, the number of properties going under contract is accelerating as buyers demonstrate resilience to interest rates.  Likely fueled by pent up desire from the last two years suppressed activity, 1,013 properties went under contract last week already surpassing the high of 2023 and only 58 properties shy of the same time 2022.  

This is driving days on market exactly where we expected, lower.  The average home takes 28 days to go under contract in this market, compared to almost 60 days at the beginning of the year.  The pattern is identical to 2023, and again, silly to compare to the ludacris 7.2 days on market in 2021 and 2022.   

Conclusion

While activity is strong and balanced in the market, Colorado real estate remains hyper-local.  There are some geographies, neighborhoods and even streets that feel like the 2021 market, with 50 showings and multiple offers in the first weekend.  And there are some areas that baffle agents and clients where the home is well prepared, effectively marketed, in a great neighborhood and reasonably priced, but the property is experiencing very little activity.  

This is a market where partnership and trust between client and a high quality real estate professional is crucial.  We are in an era where market forces and consumer expectation of excellence transcend the skill, experience and ability of most agents.  Have very high expectations of what you should experience from a professional in the real estate industry.  This is likely one of your biggest assets and where your life plays out.  You deserve excellence.