October real estate sales in Denver continued to slump somewhat compared to the frantic Denver real estate market of the last few years. Monthly home sales decreased 4% compared to the previous month. And, Denver-metro home sales dropped 16% compared to October 2017. In addition, residential real estate listings increased 35% from the year ago period.
That change in the supply and demand for Denver resale homes has some Realtors on edge. “We just aren’t that busy anymore”, was the consusus of one group of Denver Realtors yesterday. I met with that group of Realtors from all over the metro-area at new, The Kentwood Company office in the Denver Tech Center. Although, these Realtors are still busy, they are just not running at nervous breakdown levels.
Still A “Seller’s Denver Real Estate Market”
Actually, the numbers are not horrible. They just reflect the slow return to a more normal supply and demand for resale homes. However, we are not at “normal yet. Because, we are still in a technical “Seller’s Market” with a total suppyly of home at under 2 months of inventory absorption.
And, while Brokers and Sellers might be concerned, Buyers are jubliant. Now, they have a wider selection of homes from which to shop. And, they don’t ahve to make a decision to buy with hours or minutes. Usually! Yes, great home listings can still sell within a week or less. Sometimes, buyers even sumit multiple offers. But, it is no longer the rule of thumb. It is the exception.
Days on Market Increasing Too
In 2015, the average listing sat on the market only 5 days before it sold. It’s been slowing increasing ever since. In October, the average residential listing was on the market 29 days. This is likely to increase further as we enter the slower Holiday season. And, if home sales continue to slow and the number of homes for sale continues to increase, days on the market may be likely to also increase.
Should Denver Home Buyers Wait?
Well, average home price are not going down on average. In fact, the average sold price jumped from $456,000 in September to $471,000 in October. Does that mean that similiar homes are selling for more. Not necessarily! Here’s the problem. It is hard to know if prices keep incresing due to higher home sales or just more higher priced homes selling compared to lower priced homes.
For example, the luxury home market above $1m is actually stronger than the overall market. More higher priced homes selling alone is bringing up the average Denver home price. So, there is no way to know how similiar home prices are behaving based on these numbers. My observation is the same type of home that sells today is selling for less than it did last Spring. But, there is no realistic way to quantify that except on a case by case basis.
There’s another consider also. Mortgage interest rates are rising. The average 30 year loan in 3rd quarter was 4.6% according the Metro Denver Assocation of Realtors. Today, that loan is offered at 5% even. If that trend continues, the cost of a home mortage could actually go up even if prices soften. CoreLogic estimates that that the average mortgage payment could increase by 10% by next summer.
So, the Denver real estate market continues to evolve. The adjustment is gradual. But, monthly mortgage payments for home purchases are likely to increase from interest rates alone. If prices continue to rise also, homes in Denver could become even less affordable!