In a market that saw its fair share of unpredictability earlier this year, the fall season is bringing about a traditional slowdown in residential sales. New listings decreased by 5.92 percent in September, with a total of 4,589 homes hitting the market. Concurrently, active listings have risen by 11.24 percent, reaching a total of 7,629 listings. Pending sales have seen a decline of 9.29 percent, while closed sales have taken a more significant hit, dropping by 20.88 percent. Consequently, the sales volume has also decreased by the same percentage. These numbers indicate that the market is experiencing its seasonal shift towards a more balanced state.
Months of inventory have surged by 47.24 percent, standing at 2.4 months. This increase reflects a greater supply of homes available for buyers. Median days in the Multiple Listing Service (MLS) have also seen a substantial uptick, rising by 27.27 percent to 14 days, up from 11 days the previous month. Despite the increase in inventory, the median price point has grown by 0.69 percent to $585,000, marking an annual increase of 0.86 percent. Furthermore, the close-price-to-list-price ratio has increased by 0.31 percent year-over-year, reaching 99.19 percent.
This data suggests that, despite the shift towards a more balanced market, prices remain robust in the Denver Metro area. Buyers are showing a willingness to compromise, seeking concessions rather than negotiating on price. It’s clear that both buyers and sellers are finding common ground in this evolving market, with people continuing to make moves for various reasons.
Over the past seven months, inventory levels have steadily risen, offering more options for prospective buyers. Interestingly, demand seems to be softening ever so slightly, which can foretell a potential decline in prices. Denver’s real estate market is not experiencing price deflation yet, with home prices continuing to rise gently. This is likely because 2.4 months of available inventory is still well below 4-5 months, which is deemed typical for a “balanced” market between buyers and sellers.
First-time buyers are leading the way in new loan applications. They are not tied to historically low interest rates and recognize that homeownership is a path to building wealth and equity. With properties staying on the market longer and sellers often making price reductions, first-time buyers have the leverage to request concessions, a significant advantage in the current market. While interest rates may be higher than in the past, this group can negotiate rather than participate in bidding wars that characterized the market just a year ago.
In September, the luxury market segment, consisting of properties priced at $1 million or more, also showed signs of slowing down. Month-over-month, closings for detached homes in the $1 million to $1.49 million range decreased by 17.65 percent, followed by a 13.58 percent decline in the $1.5 million to $1.99 million range and a 6.67 percent drop in homes priced over $2 million. The slowdown in closings was more pronounced in the attached segment, with a 27.04 percent decline in closings between $1 million to $1.49 million from August. New listings, pending sales, and total sales volume all saw declines ranging from 4.43 percent to 15.20 percent month-over-month, with a 20.54 percent year-to-date drop in sales volume.
This decrease in activity across the luxury market has led to the highest inventory levels in the Denver Metro area in a year. Homes in the $1.5 million to $1.99 million range now have nearly five months of inventory, while homes priced over $2 million have over six months of inventory. This shift marks a balanced, if not a buyer’s, market for the first time in recent history.
For buyers in the high-end segment, this presents a favorable scenario. The average days a property spends in the MLS has increased by a significant 78.95 percent year-over-year, with homes priced over $1 million taking an average of 34 days to sell. Additionally, the close-price-to-list-price ratio is down almost five percent year-over-year to 99.03 percent, indicating that buyers can secure their dream home at or below the asking price. Sellers should recognize the shift in this segment and price their properties accurately to facilitate a faster sale.
The Denver Metro real estate market is undergoing a seasonal transition, with shifting supply and demand dynamics. While inventory levels are rising and demand softening, home prices continue to climb. This presents an excellent opportunity for first-time buyers to enter the market with negotiating power. In the luxury segment, buyers are benefiting from increased inventory, extended listing times, and the potential to purchase properties below the asking price. Overall, the market remains dynamic, offering opportunities and challenges for both buyers and sellers alike.
*Updated as of October 6, 2023