Home Prices Staying Firm in The Denver Metro Area
I think this article is "right on" regarding home prices today and in the future. I see no signs of a drop off. We are currently working with three buyers here in Parker Colorado. All, in different styles and price ranges. One buyer is trying to find a home for their son and his family, while he goes to seminary. They need a 3 bedroom, 2 bath home and want to stay under $550,000. There are very few homes available (1 or 2 per day). And, if they are priced correctly, they are under contract within 3 to 5 days. And, that is after 40 or more showings. And, over asking. This is a very tough price point (for buyers) here in the Denver Metro Area. But, we will find and secure that home. We always do. It just takes a buyer who is ready, able and willing to do what it takes in this market. Another of our buyers are two doctors that are wanting to buy a home for their daughter who is attending Rocky Vista University (a medical school here in Parker). They're trying to stay under $800,000 and have some pretty strict criteria. So, the extremely low inventory and narrow criteria makes it extra tough. Over the last 6 months, I think we have lost 3 or 4 that would have worked. But, we got out bid and did not secure the homes. But, we will. They are cash buyers and motivated. Finally, we have a very large family (10 children/not all at home) looking for a large home on 5 or more acres, here in Parker or Franktown. Their preferred price range is $1,000,000 to perhaps $1,500,000 (if the property is exceptional). The problem here is low inventory and the properties, themselves. A lot of the acreage properties are not really that nice or some are in run down communities with no HOA's and loose covenants. But, there are some spectacular ones. But, guess what. Those great ones go fast and at or above asking price. So, in conclusion, our "real time" and "real buyers" experience is this. If you think prices are headed down. Not here in our town of Parker Colorado. If you're a buyer, do it now for as much as you can afford and at a price you are comfortable with. If you're a seller, you need to be excited, because you're probably going to get a price higher than you have anticipated.
Why Aren’t Home Prices Crashing?
There have been a lot of shifts in the housing market recently. Mortgage rates rose dramatically last year, impacting many people’s ability to buy a home. And after several years of rapid price appreciation, home prices finally peaked last summer. These changes led to a rise in headlines saying prices would end up crashing.
Even though we’re no longer seeing the buyer frenzy that drove home values up during the pandemic, prices have been relatively flat at the national level. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), doesn’t expect that to change:
“[H]ome prices will be steady in most parts of the country with a minor change in the national median home price.”
You might think sellers would have to lower prices to attract buyers in today’s market, and that’s part of why some may have been waiting for prices to come crashing down. But there’s another factor at play – low inventory. And according to Yun, that’s limiting just how low prices will go:
“We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”
As you can see in the graph below, we’ve been at or near record-low inventory levels for a few years now.
That lack of available homes on the market is putting upward pressure on prices. Bankrate puts it like this:
“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”
If more homes don’t come to the market, a lack of supply will keep prices from crashing, and, according to industry expert Rick Sharga, inventory isn’t likely to rise significantly this year:
“I believe that we’re likely to see low inventory continue to vex the housing market throughout 2023.”
Sellers are under no pressure to move since they have plenty of equity right now. That equity acts as a cushion for homeowners, lowering the chances of distressed sales like foreclosures and short sales. And with many homeowners locked into low mortgage rates, that equity cushion isn’t going anywhere soon.
With so few homes available for sale today, it’s important to work with a trusted real estate agent who understands your local area and can navigate the current market volatility.
Bottom Line
A lot of people expected prices would crash this year thanks to low buyer demand, but that isn’t happening. Why? There aren’t enough homes for sale. If you’re thinking about moving this spring, let’s connect.
Why Aren’t Home Prices Crashing?
There have been a lot of shifts in the housing market recently. Mortgage rates rose dramatically last year, impacting many people’s ability to buy a home. And after several years of rapid price appreciation, home prices finally peaked last summer. These changes led to a rise in headlines saying prices would end up crashing.
Even though we’re no longer seeing the buyer frenzy that drove home values up during the pandemic, prices have been relatively flat at the national level. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), doesn’t expect that to change:
“[H]ome prices will be steady in most parts of the country with a minor change in the national median home price.”
You might think sellers would have to lower prices to attract buyers in today’s market, and that’s part of why some may have been waiting for prices to come crashing down. But there’s another factor at play – low inventory. And according to Yun, that’s limiting just how low prices will go:
“We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”
As you can see in the graph below, we’ve been at or near record-low inventory levels for a few years now.
That lack of available homes on the market is putting upward pressure on prices. Bankrate puts it like this:
“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”
If more homes don’t come to the market, a lack of supply will keep prices from crashing, and, according to industry expert Rick Sharga, inventory isn’t likely to rise significantly this year:
“I believe that we’re likely to see low inventory continue to vex the housing market throughout 2023.”
Sellers are under no pressure to move since they have plenty of equity right now. That equity acts as a cushion for homeowners, lowering the chances of distressed sales like foreclosures and short sales. And with many homeowners locked into low mortgage rates, that equity cushion isn’t going anywhere soon.
With so few homes available for sale today, it’s important to work with a trusted real estate agent who understands your local area and can navigate the current market volatility.
Bottom Line
A lot of people expected prices would crash this year thanks to low buyer demand, but that isn’t happening. Why? There aren’t enough homes for sale. If you’re thinking about moving this spring, let’s connect.
