Denver Real Estate News – February 2023
A Slow Start, but Higher Consumer Confidence
In our local real estate market, the start to the first quarter of 2023 felt a lot like the fourth quarter of 2022; somewhat slow. With an official recession likely this fall, high inflation, and the mortgage rate hikes of last year, it’s understandable why many people have been apprehensive to make a move.
Despite the slow start, consumer confidence has been on a sharp rise recently. Consumer confidence is a great leading indicator of what will happen over the next few months. To try to anticipate what the market might do, the best metrics to pay attention to are consumer confidence, new mortgage applications, home showing activity, mortgage rate locks, and finally closings.
The spike in consumer confidence indicates people are a bit more optimistic about the economy than before. If they weren’t, they wouldn’t apply for new mortgages. The increase in mortgage applications should eventually flow through the rest of the metrics, resulting in more home sales. It’s a great sign for the spring, which is historically the busiest time of year in real estate.
INFO FOR SELLERS
You Might Need to Work Harder Than Before
If you’re looking to sell your home this year, you may still need to work harder than you would have if you had listed at this time last year. Sales at the end of December were down about 40% from last year. That means there are about half as many fewer buyers looking for homes right now as compared to the same time the year before.
If you’re ready to sell now, you’ll need to make sure your house is “show-ready”. To be show-ready, your home should be very clean, needed repairs should be complete, and curb appeal should be apparent. Most importantly, your home should be priced accurately. If you try to price your home based on spring 2022 levels, you’re almost certainly going to face a price reduction a few weeks after being on market. The frenzy of last year might be over, but we’re still in a seller’s market. If you put in the effort to have your home in tip-top shape and are realistic about pricing, you should be able to get a great price for your property.
Here are the stats from December as a reference:
INFO FOR BUYERS
Ample Opportunities, but Still Not a Buyer’s Market
There is great news for buyers in the current market. For starters, inventory at the end of December was up 222% from the same time the previous year! That makes competition a lot less fierce than before, giving buyers more options, more time to make offers, the ability to ask for concessions, negotiate price, etc.
Mortgage rates are also on a slight decline from their recent peaks. The 30-yr. fixed rate is 6.125% (at the time of writing), which is down almost a full percent from back in November when the same rate topped out at 7.08%. This is a small victory for buyers, who may pay less for a home than they would have back in November. Home price increases also slowed in December, which is great news as far as keeping your monthly payments as low as possible.
Please keep in mind, no matter what the media may tell you, we are still not in a buyer’s market. The advantage still goes to the sellers. How so? Despite inventory being up tremendously year-over-year, that level is up from record-low levels of homes for sale in the past few years.
Right now, we have about 1.5 months (45 days) of housing inventory. To even make this a balanced market, where buyers and sellers have equal negotiating power, we would need to have between 4-6 months (120-180 days) of inventory. A buyer’s market would equal roughly 6-8+ months (180-240+ days) of inventory. Don’t let the media trick you into thinking you hold all the cards when buying a home right now. Sellers can still easily turn down your offer if they are offended by anything too low or if they have better offers on the table.
*We use reasonable efforts to include accurate and up-to-date information. The real estate market changes often. We make no guarantees of future real estate performance and assume no liability for any errors of omission in the content.
As always, feel free to contact us if you have questions or are interested in making a move.
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