Market Updates »
Here we are in the last month of the first quarter of 2022, and I don’t know about you, but it seems like just yesterday we were celebrating the New Year. The only thing going faster than time are homes for sale in the Denver metro area. If you have been following TK Homes’ monthly Denver Real Estate Market Update articles, then you know we are starting to sound like a broken record stuck on repeat. It’s starting to feel like high school all over again where at the beginning of all this, we really loved the song, but now it’s officially getting old and time for a new playlist.
With inventory still evading us here in the Denver area, homes are not sitting long before they are flooded with literally hundreds of private tours within days, scratch that, hours of being on the market. With TK Homes’ unique position of working with other top producing agents in Denver, we have access to real time data that no other agents have. We can tell you confidently that the data tells us that if a home is priced correctly right now, you can expect 50 to even over 150 showings in a single weekend. Each of these showings are with approved buyers ready and willing to make an offer. To put this into context, three years ago we might have seen 20 or fewer showings on the same homes (don’t forget, they would have also been priced significantly lower then too), and at that time, we were impressed with the number of showings. With the current number of potential buyers for a single property, it’s pretty easy to understand why homes are getting bid up, in most cases 12% to 15% over list price.
The continuing factor playing into such a hot seller’s market in Denver is the lack of inventory. The story above with the number of private showings says it all, in my opinion. There are simply not enough homes available for the number of buyers wanting to buy. Supply and demand are way out of alignment which is causing nothing short of a feeding frenzy when a home does hit the open market. The other interesting item to talk about that could affect the market is interest rates.
Just a few short months ago it was not uncommon for buyers to be enjoying interest rates in the high 2’s into the low 3’s. Those days are behind us at this point as many buyers are now seeing interest rates in the high 3’s or even into the 4’s. Please don’t misunderstand me, anything in the 4% range is still historically a great interest rate. However, many buyers today have never seen anything so “high”, and yet it has not even made a dent on the demand or slowed down buyers rushing to see the one home available in the preferred neighborhood. At the beginning of the year, TK Homes made the prediction that it would be raising interest rates that finally put pressure on the Denver market and could help even the playing field between buyers and sellers. I still believe this to be true, but at least for right now they have not risen enough to have much of an effect on the current market conditions. However, there is one other looming factor that could now also impact the Denver real estate market: war.
War is never a topic that we want to talk about; unfortunately, with the conflict with Russia increasing quickly, it’s not a topic we can avoid anymore. War is a factor that can affect markets; they are expensive and create uncertainty. In my opinion, the current status of Russia will have little to no effect on the Denver real estate market. I can say this because in the past week things have escalated with Russia, and our showing volume and offer status hasn’t changed. However, that doesn’t mean it won’t. Historically, when there is time of uncertainty, people do not want to take unnecessary risks or make changes. This could put additional pressure on homeowners already on the fence about whether to sell or not, reducing inventory levels even more. Of course, the opposite effect could also be buyers might not be wanting to take on the risk of purchasing such a large asset during a time of uncertainty; however, will it take enough buyers out of the market to also offset our extremely low inventory market conditions? At this time, I think the only option we have is to wait, see what unfolds in the upcoming weeks and months with Russia, and see how the local Denver market responds. Rest assured, we will be here to continue to keep you updated on Denver’s real estate market.
Check back next month on the first Wednesday to see if we’ve been able to fix our record player or if we’re still stuck on repeat with Denver’s April Real Estate Market Update article.
~ Article written by Team Leader & REALTOR®, Trevor Kohlhepp