January 2022 Market Update
After a lull over the holiday season, the Denver housing market generally sees about a 70 percent increase in new inventory in January. This January the Denver market only saw a 31 percent increase. While these numbers can be attributed to the seasonal nature of the market in the winter of 2021, it still left the market with only 1,184 active listings at the end of the month. To put that into context, the Denver market has been experiencing an inventory crunch for quite some time now and 1,184 is less than half of what we saw last January.
Average Close Price
January 2022 also saw a small dip in the average close price, 2.73%. This is likely the last dip we will see for quite some time and more an indicator of the conditions in December, when these homes went under contract, than a prediction of what is to come. Even with predicted interest rate hikes, the inventory squeeze in Denver will likely supersede any pricing corrections.
2022 Interest Rates
That is not to say that interest rates won’t be a factor. Denver home prices will inevitably be affected by interest rate increases from the fed, though instead of price decreases, we just expect slower appreciation. Predictions suggest that rates will increase up to a full percent over the year. This is another reason we expect more inventory soon. Sellers can maximize proceeds if buyers can maximize their budgets. Rates have already seen an upward trend and future increases may discourage some Denver buyers.
Denver Rental Rates
Further complicating things for first-time buyers in Denver, are rental increases. In Denver, January brought a small dip in rental rates, but still put rents 16.5% higher than last year (Apartment List). The increases are anticipated to continue. In a national poll from December 2021, 53% of landlords reported that they planned to raise rent prices in 2022 (TurboTenant). While this can be stressful for home-buyers, it can also bring confidence to your home search. Owning a home is the only way to lock in your housing cost. It might also mean that landlords will be willing to work with you if you are still in a lease and get a home under contract.
The most important things for buyers are to stay patient and to stay ready. It’s never too early to talk to a lender. Lenders can give you tips on how to restructure your finances to optimize your loan terms. Your lender should also be able to educate you about what predicted interest rates increases mean for your budget. Buying a home when there is limited inventory is not impossible, but it can take some time. Keep an eye out for an uptick in inventory at all price points that could spur a chain reaction. When current homeowners are able to find replacement properties, the market could gain some momentum.
If you are ready to move, this record-low inventory could garner huge amounts of interest in your property, but there are still strategies to maximize your proceeds. Whether you decide you’d like to wait until the spring or list now, we still believe in presenting homes as their best version. Small cosmetic fixes can make a big difference. Now can be a great time to prepare your home for a future sale.
As always, we are here to guide you through every step of the home buying process. If you have any questions, don’t hesitate to reach out.