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There’s no doubt that the summer of 2024 in Denver has been a hot one, with several days seeing temps above 100 and very few rainstorms providing relief.  With it officially being August, many are looking forward to the cooler months ahead that are just around the corner. However, Denver area home sellers and buyers are not having to wait for cooler market conditions.

Denver’s real estate market never caught up to the exterior temps of the summer and remained mainly flat from January through July, which is typically when we see the most appreciation. With inventory levels continually increasing month over month, this trend continues as we come into the back-to-school season. I saw an Instagram post from the Denver Metro Association of Realtors that I believe sums up the current Denver market conditions perfectly. “Buyer’s fear [or even expect] a repeat of 2008, sellers hope for a return of 2021 and renters expect interest rates to drop back to 3%.” The thing is, none of these scenarios are likely true; however, because each group believes them to be, it’s creating a standstill in the market while each party waits for their belief to play out. Let’s dive into it more.

Sellers either believe homes are still as in demand as they were in 2021 or that demand will increase to match the levels of 2021. This means that sellers are either 1. Not selling right now at all as they wait for conditions similar to what we saw in 2021 (homes selling within hours, multiple offers, way over list and homes selling in as-is condition) or 2. Overvaluing their homes when they do decide to go on the market, assuming they have to be worth what they were at their peak in 2022 or, in some cases, even higher. However, due to current market conditions, these homes are not selling, which is causing the higher inventory levels we’ve seen throughout the summer.

Currently buyers are moving very slowly, and some have decided to sit the market out as they wait for a “crash” in the housing market, similar to what we experienced in 2008. Their fear is if they buy now, they will be stuck in a position where they are upside down once the crash comes. This is causing buyers to be extremely picky when it comes to jumping into the market, making offers, and accepting a home’s condition once under contract. Higher interest rates are not helping buyer’s fears either, making it very expensive to borrow money to buy a home. This added to the fear of a crash has forced many buyers to sit on the sidelines. This also contributes to higher inventory levels as buyers pass up on homes that in previous market conditions would have sold.

The final party playing a big role in Denver’s softer real estate market is renters who believe interest rates will go back down to 3%. Since many of these renters are enjoying lower rent payments than a mortgage payment would be at 7%, there’s little motivation to jump out of the rental world into homeownership, especially if you can wait and get a lower interest rate in a few months.

These three myths believed by the biggest players in Denver’s real estate market are creating a standstill, evident in increasing inventory levels, increasing price reductions on homes for sale, and a lower Denver homebuyer pool. However, unfortunately, most experts, including the agents at TK Homes, believe all three of these beliefs are incorrect. There’s no indication that we’re going to see a housing crash similar to 2008, values have not yet returned to their 2022 peaks in most areas, and interest rates are not likely to get back down to 3%. However, until home sellers, buyers, and renters are willing to let go of their beliefs, Denver’s market may continue to remain mainly flat with increasing inventory levels, higher number of price reductions, and picky buyers.

Whether you’re thinking about buying a home or selling a home, contact a TK Homes agent today, learn what the real market conditions are, and learn about our predictions for future conditions based on actual facts and evidence provided by the market. Together we can determine if selling or buying a Denver area home makes sense for you right now and when would be best for you to make a change in your housing. Visit our Blog every first Thursday of the month for the most update-to-date information on Denver’s real estate market.

~ Written by TK Homes CEO/REALTOR®, Trevor Kohlhepp