Exactly a year after rising mortgage rates began tempering the wild real estate market that raged during the pandemic, Colorado Realtors are feeling some slack in sales this spring — generally the most robust part of their calendar year.
That lukewarm market shows in the modest number of new single-family listings that were put online last month in the 7-county Denver area, 4,436 homes, down 29% from what had arrived for sale in April a year ago, according to the latest Market Trends Housing Report by the Colorado Association of Realtors released Wednesday.
In like manner, sales of single-family homes in the metro area were off almost 25% from a year back, and the median sales price of that home, $614,170, marked a 6.9% decrease over the 12-month span.
“It seems like this year started out normally, ramping up, but the last few weeks were cold water,” said broker/owner Mark Cramer of Camber Realty in Cherry Creek, who with his wife, Lisa, runs an office of 16 agents and did around $150 million in sales last year.
“It feels like July in May,” Cramer said, referring to the softening that the market often registers as families leave town for the prime vacation months.
Buyers are still arriving from out of state, wanting to make the switch to the celebrated Colorado lifestyle they’ve heard so much about, he said. But those buyers are now taking their time, doing their homework, before signing.
“They’re culling the surrounding area, digging into the schools, the grocery shopping,” Cramer said, who was working with a family from Washington, D.C. this week. “It’s a luxury they didn’t have a year ago.”
“The urgency, the panic to buy, has ended,” CAR spokesperson Matt Leprino said.
He gathers monthly data for the association and sees the new trends generally as a good thing.
“Last year was so weird,” Leprino said, noting that although fewer homes are arriving on the market now, the overall inventory is markedly higher than last year, up 40% in metro area, up 54% statewide.
In like manner, single-family homes in metro Denver are lingering on the market longer before sale — around 35 days now, as opposed to just 12 days last year. Statewide, that hangtime has moved from 24 days to 47 days, according to the report — a 1.7-month supply with respect to single-family home inventory.
That supply is still viewed as sparse in most Denver neighborhoods, notes Rike Palese, broker/manager of ReMax Professionals’ DTC office at I-25 and Dry Creek Road.
“Properties sell right away if they’re updated and priced right,” he said. “We’re still seeing some offers over list.”
However, properties that remain priced close to their 2022 high and that haven’t been updated for showing are sitting for a while, said Palese.
“Some sellers are still working off of the peak-season pricing last spring, hoping that their house will get that.”
Even the well-priced and better-appointed homes that attract offers are not going for as much over list as before, Palese said.
“It’s still a great sellers’ market, and for the buyers willing to do a little work, it’s a good market for them.”
Palese said the cooling off is more tangible in the higher priced ranges: “People are being more judicious, more concerned about paying too much.”
Meanwhile, the latest report has a bit of good news for younger buyers reaching for a rung on the market’s ladder, said CAR’s Leprino.
The report includes CAR’s Housing Affordability Index, a measure of how affordable the median priced home is for homebuyers in the area. Those numbers pre-pandemic had often ranged in 70s and even 80s, meaning that 70 or 80 people out of 100 could afford to buy that typical house. But the index plunged during the big runup in prices from 2020 to 2022, dropping to just 49 on the scale a year ago.
Now, Leprino notes, the region’s affordability has made a modest tick upward, to 51.
“It’s stopped falling, and that’s something to celebrate,” he said.
Nationwide, analysts note that weakening sales brought on by higher interest rates and lower inventories have actually widened the share of sales that are going to homebuilders. Those companies have often held onto their production numbers, in contrast to a smaller number of resale homes coming on the market.
“We’re seeing a lot of activity now,” said Trent Getsch, who sells custom homes on half-acre sites at Timbers at The Pinery in Parker.
Getsch added that much of that interest this spring is in home sites, with numbers of them going under contract earlier this year that will likely not generate a completed home sale for a year or two. Sales of completed homes, including one that sold last month at $2.15 million, have moved at a cooler pace.
“But we’re not heavy on inventory,” Getsch said. Just two of his homes are available now, including one at just under $2 million.
Agents in local markets around Denver report that buyers and sellers in their areas are cautious as they sense the cooler market.
“Homeowners are dazed and confused” said agent Kelly Moye of Compass Real Estate in Broomfield, who tracks data for CAR in Boulder and Broomfield Counties.
State property tax assessments, which arrived in mailboxes last week but that are largely based on data from the peak of the 2022 market, add to the perplexity over whether and how much to price a home for sale, she noted.
Prices are down year-over-year a sizable 12% in Boulder, and just 2% in Broomfield, she said, with home inventory off by even larger numbers.
“Some listings are selling in a weekend with bidding wars and others idle for a few months before a sale,” said Moye in the report. Buyers —particularly in the more affordable ranges — are waiting for rates to drop off to extend their buying power, she added.
But Mortgage Broker Nicole Rueth, senior vice president at Movement Mortgage, said that purchasers are rapidly adapting to those higher rates.
“Buyers are no longer shell shocked by a rate with a six handle,” Rueth said. “They’re getting accustomed to a rate in the sixes. Homebuyers have acquiesced.”
Rueth adds that borrowers are already anticipating being able to refinance those current rates at some point.
CAR’s Monthly Market Statistical Reports are based on data from Colorado Multiple Listing Services. Metrics don’t include for-sale-by-owner transactions or all-new home construction. The association represents 29,000 realtors statewide.
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