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April Metro Denver Market Review

April brought a mix of optimism and challenges to the Denver real estate market, with resilient buyers driving continued activity despite financing pressures. Despite challenges posed by rising interest rates, buyers remained resilient, eager to seize opportunities presented by increased housing options and strategic adjustments in pricing dynamics. Contrary to national trends, Denver’s home prices continue their upward trajectory amidst strong demand, with a modest median price increase of 1.27% to $602,500 and a record-breaking average price increase to $727,700.

Inventory Shifts

One of the most significant shifts in the Denver market has been the notable increase in inventory. Inventory was up in April by 19.51% month-over-month and an even more impressive 51.32% year-over-year, reaching 6,990 active listings. This rise, alongside a 21.22% increase in new listings, provided buyers with a broader selection of properties. However, pending sales only saw a marginal growth of 5.53% year-over-year, and closed sales were down 4.79%, indicating a potential shift in buyer behavior and market dynamics. These data points do not mean that the Denver market is suddenly a cakewalk for buyers. There are still only 1.89 months of inventory when, historically, 5-7 months of inventory have been labeled a balanced market.

Price Sensitivity and Property Trends

Denver’s real estate market remains highly price-sensitive, with well-priced homes going under contract in less than a week, while those overpriced linger on the market for extended periods. The different trends in detached and attached properties underscore the importance of strategic pricing, with detached homes witnessing higher sales volumes, stronger list-to-close prices, and faster transactions than their attached counterparts. Out of the total pending properties in April 2024, 75.72% were detached homes, underscoring their dominance in the market. Moreover, detached homes boasted median days on the market of 7, significantly lower than the median of 12 for attached properties.

Mortgage Rates and Buyer Behavior

Despite rising inventory and evolving pricing trends, mortgage rates have been crucial in shaping buyer behavior. Despite reaching a high of 7.5% three times in April, mortgage rates have not deterred committed buyers, who view today’s higher rates as an opportunity to enter the market rather than wait indefinitely. Overall, mortgage purchase applications are down. However, the 27.27% drop in median days on the market and increased spending hinted at a potential uptick in sales activity. Moreover, committed buyers viewed today’s higher interest rates as an opportunity to enter the market and utilize a long-term strategy vs. the fast-paced flips that characterized the last ten years of the Denver market. 

Rising Homeownership Costs

In other housing market news, don’t be surprised if it feels like owning a home is getting more expensive. Colorado homeowners may not be paying these 7%+ mortgage rates, but their out-of-pocket costs have increased due to insurance and property tax increases. Colorado insurers have been hit hard by Marshall fire claims and, in response, are raising premiums as much as twofold. As we discussed at the end of last year, with home values increasing in much of Colorado, so are many homeowners’ property taxes. Be aware that your mortgage company may ask you to contribute to your escrow accounts, which usually pay for taxes and insurance.

Optimism persists as Denver’s real estate market navigates the challenges posed by rising mortgage rates and increased inventory, fueled by resilient buyers and strategic sellers. As we all continue to navigate these evolving dynamics, staying informed and proactive will be essential to making informed decisions and securing long-term success in Denver’s vibrant real estate market.