As the Denver market normalizes, we are grateful that there remain many opportunities to look at the silvering lining of the industry. The evolving marketplace allows buyers, particularly luxury buyers, the gift of time to decide on a home while negotiating terms that suit their needs and dreams. Meanwhile, sellers have more time to analyze the marketplace to position their homes correctly while being able to experience a great return on investment due to rising prices over the last few years.
As of late, we’ve noted that 2022 is constantly compared to 2021, which was anything but normal, and year-over-year comparisons are painting a deeply negative picture which causes confusion in the current market and what next steps to take. Below, we are focusing on dissecting some of the whispered misconceptions that we have been hearing of from our buyers, sellers, and other industry professionals in hopes that it helps potential buyers and sellers, particularly in the Luxury Market, make more informed decisions as we head into 2023.
Overall in the market, active inventory did slightly decline to 7,290 homes on the market at month-end, but this doesn’t mean what you think it might.
The misconception here being that many are not acknowledging how this relates to the pandemic’s affect on housing. While this is a staggering jump, and increasing inventory continues to make news, we would like to point out that the current inventory is still less than the pre-pandemic inventory of 8,557 active listings in October 2019. As our market readjusts, both in luxury and overall, we have to bring into consideration that the last two years of COVID-19 have been more of the exception, and not the rule.
Our CEO, Gretchen Rosenberg, pinned an article on Kentwood’s website in August explaining: “Do you remember what the interest rates were in 2018? The average that year was 4.54%, but they got up to 5%. Not altogether that far off the rates today as I write this. Again, 2020 and 2021 were not usual or customary, they were a reaction to a once in a lifetime black swan event.”
If COVID-19 had not occurred, records from DMAR also conclude that the market trajectory is on pace with where it should’ve been back then.
The market is crashing and as a result, the Luxury Market saw a decline in closed properties and new listings this month, meaning buyers have all the power.
This statistic has some startled, however, our point of view is that there has always been seasonality in the market and a decrease in active listings is consistent with the past. The value of houses is about the relationship between supply and demand. While buyers may think they have negotiation power in this market right now, it’s a bit of a misconception because many sellers are hesitant to drop their price too much, which is why the close-price-to-list-price ratio in October was 98.72 percent. We suspect November will represent a similar flow as October.
When buyers say that they want to wait until the New Year to buy, this rarely means January 1st.
While this may not be a “current market” misconception, and more a “November and December misconception,” it’s worth noting that this time of year brings a slow down with the holidays that continues into early spring. When people state that they are going to “start looking” for a home, it usually really begins around the third week in January or later.
We continue to still see bidding wars in the Luxury Market.
While bidding wars are certainly not as common, there’s a misconception that they are obsolete and that is not the case. We have heard of buyers that had to compete on a million-dollar house that went above the asking price. Each listing will always dictate its own story. The key to receiving multiple offers in this market is to price conservatively.
“Houses are no longer selling themselves … but if you wait til spring you’ll be fine.”
On the flipside, homes are not selling themselves in quite the same manner but the misconception we’re starting to see is reflected in how few new listings there were last month in the Luxury Market. We stand by the recommendation that it’s still important to remember to invest in photography, staging, and open houses, plus have a price reduction strategy ahead of listing.
If you plan to wait to sell until spring, do not hold off on the updates.
On the contrary, plan ahead of time to do all the “little” updates necessary to sell your home quickly. Include replacing light bulbs, painting, servicing the HVAC, getting carpets cleaned, repairing screens and decluttering on their home maintenance project list. Other recommended fall home projects include:
● Paint the exterior of the home
● Aerate and overseed lawn
● Clean the gutters
● Winterize sprinklers
● Repair the roof, if needed
Whether you’re looking to buy or sell a home, reading past the headlines and hyperbole is key. Having an experienced Kentwood Real Estate Broker who knows what’s happening in the housing market can help you make an informed decision. Other team members who will be valuable as you go through the process: Prosperity Home Mortgage and HomeServices Insurance. Our partners who we trust to help you dissect the news and apply it to your life decisions.