Home sellers in metro Denver are starting to get squeezed in ways they haven’t felt in a long time, from their listings taking longer to sell, discounts replacing premiums and from buyers making more demands.
For example, the number of days it took for a new listing to go under contract averaged 19 days in August, up sharply from 13 in July and 10 in June, according to the Market Trends Report from the Denver Metro Association of Realtors.
“All of the major statistical categories are pointing to the market slowing down,” said Andrew Abrahams, chairman of the DMAR Market Trends Committee, in comments accompanying the monthly report.
The number of closings dropped 5.9% to 4,221 last month from July and they are down 30.2% from a year earlier. The number of active listings at the end of August fell 5.7% from July to 6,939, partly seasonal and partly because of a drop in new listings. Compared to a year earlier, there are 114.6% more single-family homes on the market and 47.4% more condos and townhomes.
Monthly price declines that started in July also continued. The median sales price of a single-family home fell 0.77% last month from July to $645,000 but remains up 11.2% on the year. The median sales price on condos and townhomes fell 2.2% over the month to $400,000 and is up 7.8% on the year.
The premium that homes and condos received on average above list price peaked out at around 7% in April, unprecedented given that in past hot markets a 2% premium was the top range and because seller agents do their best to get the price right on the front end. That premium dropped below 1% in July and in August it flipped to a discount of 0.59%.
Abrams said it is the first time a discount had shown up in the metro Denver market since July 2020. And he also notes that in July, 29.2% of sellers had to offer a concession versus 22.9% in July 2021. The average concession ran $5,015 this year compared to $3,761 last July.
But the market doesn’t look like it will go into free fall. Sellers listed 3,694 single-family homes in August, down from 4,556 in July and 5,675 in June. Some of that reflects the normal seasonal slowing as families shift their focus to the start of school. But in August 2021, sellers listed 4,300 homes.
Abrams predicts the inventory of homes and condos on the market should drop below 5,000 heading into 2023. But so much of what happens in the months ahead will depend on the direction of mortgage rates as the Federal Reserve tries to bring inflation under control.
