July Market Update 2023
Amid persisting interest rates and rising average days in the MLS, the Denver market still shows signs of strength and tenacity. Inventory was slightly elevated this month at 6,299 homes for sale, a 3.76% increase from last month. Median home prices are down slightly at $590,000, but this is despite mortgage rates that are climbing close to 8%. The current market conditions make it difficult for buyers and sellers to make short-term decisions. Still, they can find confidence in long-term investments based on Denver’s strong economy and encouraging future.
Golden Handcuffs
With interest rates above 7%, many homeowners are in the “golden handcuff” conundrum. Homeowners are hesitant to sell and give up their low-interest rate mortgages in exchange for new homes that would fit their needs better but also come with higher interest rate mortgages. Impressively, 91.8% of mortgages nationwide are below 6%, and 82.4% are below 5%. Would-be sellers are almost guaranteed to pay more interest in a future mortgage. This conundrum results in fewer buyers in the market but also limited inventory. This is reflected in the 15.33% dip in listings from June and the 24.76% dip from July 2022. Despite this, median home prices are down 0.84%, a strong indicator of the high demand in the market.
Sellers Adaptability
With this in mind, sellers and buyers must make more compromises to get deals done. Sellers are more likely to consider contingent sales and other buyer-friendly terms as the median days on the market continue to rise. The median days on the market for July was 9 days, up 50% from last year’s record low and up 28.57% from last month. However, competitively priced homes in desirable neighborhoods continue to move quickly, especially at price points below $1 million. In these competitive markets, buyers must act quickly and make strong offers.
Buyer’s Advantage
Right now may be the moment for potential buyers to make a move. Historically, buyers can secure the best sales terms after a period of seller dominance. With the close-to-list price ratio of 99.88%, most sellers are making concessions to get their homes sold. Homes that have been listed for 30+ days and still meet your criteria are likely being sold by sellers who are ready to make a deal.
Looking Ahead
Seasonally there is a glimmer of optimism on the horizon. Historically, July and August often exhibit a more subdued market, with a resurgence commonly observed in September. We know that many sellers and buyers have been waiting over a year for mortgage rates to take a dive, yet they persist. This fall could be when many decide that their desire to make a move outweighs the golden handcuffs of their current interest rates.