The Coming Bounce Back

November 21, 2023 | denver-housing-market

The 2023 Colorado real estate market has been as low in sales volume relative to population size as any market in history.  But the narrative about the market has been misleading.  

Home values increased through the spring and summer selling months and have held steady through the second half of the year, which typically sees more of a seasonal decline. 

But more important than price, is the type of properties that have been selling, which actually demonstrate stability and foretell a potential market surge this coming spring.

Year to date the Denver market has listed 44,480 properties, down 35% from the last 10 year average.  

However, if we look a market activity broken down by price range,  we see a very different and compelling story.  One that demonstrates the top half of the market by price remaining strong and the bottom half of the market impacted by rising interest rates disproportionately.  

Homes Priced Above $1.2 million

Over the last 15 years, the number of properties offered for sale above $1.2mm was only outpaced in the year 2022.  

And, the number of properties sold above $1.2mm in 2023 was outpaced only in 2021 and 2022.  

Given the increase in home values over the last 5 years, these statistics in and of themselves are not substantially meaningful.  

But if we compare relative market activity in this price range to the lower 50% of the price range we start to see a compelling story. A story that tells us some parts of the market are highly sensitive to the interest rate changes of the last 18 months and some parts of the market are not.  

Homes Priced Below $650,000

Year to date, the Denver market has sold 22,457 properties below $650,000, or an 87% decline from the last 10 year average.  Even adjusting for home value increases over the last 5 years, the precipitous drop from 2021 highlights the interest rate sensitivity of buyers in the lower price point..   

Homes Priced $650,000 to $1.2 Million

And because we know your are curious.  Yes, the $650,000 to $1.2mm market is similarly strong to the high end market, while showing slightly more indication of interest rate sensitivity.  

 Next Spring?

So what does this mean for for the coming spring real estate market, which is only 120 days away?  

Inventory in the Denver market has remained relatively low and while demand has dropped with interest rate increases, demand has still outpaced supply and home values have continued to rise.  

The market dynamic of relatively low inventory isn’t likely to change much.  With more than 70% of homeowners holding on to an interest rate below 4%, significant conditions must exist in their life to initiate selling their home and giving up that interest rate. This will keep inventory low.

But, rates are likely to drop this coming spring.  While its too soon to tell if this is a reliable trend, a 30 year fixed mortgage rate is already down .5% over the last 3 weeks alone.  

Rates dropping is not just a guess or hope.  There are 5 major leading indicators of mortgage interest rates and all of them point to a decline of mortgage rates through 2024.  

Note-there are plenty of wild cards that could ultimately influence the mortgage rate market such as international conflicts, presidential election year, national debt and federal reserve policy.

If interest rates do drop, we likely see a surge of activity in the lower price point of the market which will cause a ripple affect of market activity upward into an already strong high-end market.  

Unfortunately, with so many current homeowners likely hanging on to their low mortgage rate, this means inventory could plummet and we may see a very competitive Denver real estate market, once again.  


Sellers will likely see a significant increase in activity this coming spring.  Over the last few years we saw sellers get lazy in preparing their homes for sale.  No matter what the market conditions, a well prepared home will always command the highest price in the market.  Anticipate a busy spring next year.


If you can afford to do so, now is the time to buy.  Inventory is up just a bit and competition is down a bit.  We are in the time of year where home values are declining and sellers are more willing to negotiate.  This likely only lasts another 45 days before we begin to see the upswing of market activity for 2024.  

If you buy now, you are paying a higher interest rate, but lower price.  If interest rates do drop this coming spring you will see solid appreciation and can refinance to the lower rate at no cost.  If interest rates remain the same, the market will still appreciate this spring with low inventory.  And if rates rise (which is highly unlikely) you will be glad you got in at the lower payment of the lower interest rate.  

Our recommendation to buyers purchasing in this market:

  • Only buy if you plan on keeping the home at least 3 years. 
  • Have at least 6 months of cash in reserve to make your household payments.
  • Be comfortable with your payment today, not relying on interest rates to drop.

Share this Post