Rising interest rates push Denver market into a shift
April gave us a hint, and May is confirming — the Denver real estate market is officially experiencing a shift — homes are taking longer to sell, buyers are making fewer over-asking offers and when they do, they do at increases lower than what we’ve seen in the past several years, and bidding wars are dropping.
We all knew this was coming, eventually, and the incremental increase in mortgage rates is definitely playing the role here. Increasing interest rates are clearly having an effect.
The latest numbers we have, from April, don’t show the full impact, as they reflect buyer and seller sentiment from March and earlier, when accounting for closing periods. I am seeing the shift everyday on the street as a working agent — in negotiations, conversations with colleagues and more.
The April numbers do reveal one aspect of the shift — significantly more inventory. Typically inventory rises month-over-month at single-digit percentage rates at this time of year. However, the March-April Denver metro real estate inventory jump came it at 44.3 percent!
Source: Denver Metro Association of Realtors May 2022 Report
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In some ways, the shift is a good thing. I have buyers who have been hunting for months, finally getting under contract. Overall, buyers will find a higher likelihood of getting under contract in this market, after years of competing for too-few homes that went off the market very fast and went significantly over asking.
Sellers should expect lower demand for their homes, in general. Six months ago, buyers would go $300,000 over list. Those instances will become rarer. Rising interest rates are changing the economics of buying.
This doesn’t mean the sky is falling, however. Your home just might not go under contract the first weekend you list :). It will likely just take a few more days for the right buyer to see and offer on your house.