Sunday, 14 Apr 2024

Low inventory keeps July’s Denver home market sluggish

With a near-record low number of homes available in the Denver metro in July, it’s still officially a seller’s market. Still, some buyers are seeing a little relief as the closed price-to-list price ratio dropped slightly below 100%.

“Anecdotally, listing agents aren’t seeing the bidding wars from 2021 and early 2022 or the strong offers with no contingencies,” says Colleen Covell, a member of the Denver Metro Association of Realtors market trends committee and realtor at Mile Hi Modern.

“Burdened with high-interest rate loans, buyers feel entitled to take their time, wait for the best home to suit their needs, and then negotiate for all necessary repairs and seller concessions.”

According to the monthly report from the Denver Metro Association of Realtors, July’s housing market continued to be sluggish, with only 6,299 active listings at month’s end, a 4% increase over June’s 6,071. Historically, the average number of active listings for July is 15,745. The record high of 31,989 listings fell in 2006, while the record low of 4,056 listings hit in 2021.

The median close price in July dropped about 2% from June from $599,500 to $590,000.

“Buyers are rate and budget conscious,” said Libby Levinson-Katz, chair of the DMAR market trends committee, in the monthly report. “Buyers are more confident offering under the list price and asking for seller concessions to help buy down their interest rate even for new homes hitting the market.”

Levinson-Katz said that seller concessions averaged $7,295 or 48% in June, up from 29% last year.

Buyers can feel more confident negotiating, especially for homes on the market for a month or more.

“Those sellers likely have dropped the list price and may be more willing to negotiate,” she said.

Allie Yates with The Agency-Denver said pricing is critical.

“Savvy buyers in the market are focused on affordability. With the high-interest rate buyers face today, a poorly priced listing won’t even obtain showings, let alone any offers.”

William Maline, another marketing committee member and realtor with HomeSmart, said buyers are becoming more discriminating.

“It’s no surprise that after multiple years of buyers essentially bowing to sellers’ demands, many buyers are less than thrilled about continuing that trend and are ready to exercise a more discerning eye,” he said.

But he warned buyers face two markets.

“The best house on the block continues to draw ample attention and demand, while homes with undesirable features are not quite the ‘deal’ they’re looking for due to relatively high-interest rates leaving many sellers not ready to participate in today’s market.”

Mortgage holders with rates higher than 5 percent as of June 2023 are nearly twice as likely to plan to sell their homes in the next three years than those with lower rates.

That promises continued low inventory for the next few months at least.

“The market feels locked,” Covell said. “Potential sellers will not contribute to our low housing stock until they are incentivized to shed their ‘golden handcuffs’ of low-rate mortgages. With the higher cost of buying a home now, potential buyers are taking their time and only jumping when a house checks all their boxes.”

The news and editorial staffs of The Denver Post had no role in this post’s preparation.

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