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School is out, graduations are behind us, and the next major holiday is July 4th; it’s officially summer in Denver! Historically, the next few months mean homes across Denver are being put on the market, homebuyers are out in full swing, and Coloradans are on the move. So, is 2024 adding up to follow historic trends or paving a path all its own? Before we specifically answer this question, let’s look at some current facts for the year.

 

The most important fact that we should look at is interest rates. It’s no secret that everyone in the real estate industry was hoping to see rates come down this year, even the Feds were talking about rate cuts in 2024. However, year to date we’ve seen very little movement in the rates and exactly zero cuts from the Feds. In fact, we started the year being told there could be as many as six rate cuts throughout the year, and now they are saying there could be possibly three max or even zero. It is important to note that the mortgage interest rate is not directly tied to the Fed’s rate, but they usually follow a very similar pattern. At one point in 2024, we saw the mortgage rate rise to the mid 7s and even hover at the highest point since rates went up in mid 2022. Then, they came back down and hit that 7 mark and barely broke into the high 6s. Interestingly, I saw many mortgage lenders celebrating the “lower” interest rate. Sure, 6.99% is better than 7.5%, but it’s a far cry from the hype we were hearing regarding the lower interest rates everyone was hoping for as we celebrated the New Year. Needless to say, interest rates remain high, and it’s affecting the market.

 

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In many areas across Denver, home values have been staying relatively level year to date. In communities that have seen appreciation, it’s been very modest with just a few percentages for the year. The good news is that we didn’t see much depreciation during the 2023 fall slowdown, so values are higher than compared to this time last year, even with the low year-to- date appreciation.

 

As we settle into the summer, we are starting to see an increase in homes for sale, which we would expect this time of year. However, we’re not seeing the higher level of homes going under contract; this means that right now we’re seeing inventory levels increase. If this trend continues, it could put downward pressure on home values, continuing to keep values flat throughout the summer and potentially even cause depreciation as home sellers reduce their asking prices to attract buyers. The lack of new buyers this summer is likely a direct result of the remaining high interest rates. Although year to date has been a little slower on the buyer front, it's not as straightforward as it might sound.

Homes that are priced correctly and homes in the higher price points are selling quickly, often with multiple offers and over list. This is because there is still a big demand for homes in Denver. Even buyers who are tired of high interest rates recognize a home that is valued correctly or has features that are hard to come by, like views, unbeatable location, or high-end finishes. So, when a home fits this criteria, it gets snatched up by buyers regardless of interest rates. The higher-priced homes are often bought by buyers whom interest rates don’t affect as much. Both of these situations paint a very different story than the first part of this article. The Denver market has huge potential for turning down a very different path as we head towards the second half of 2024.

 

If we see any of the mentioned rate cuts in the second half of 2024, there are enough signs that it’s not hard to believe that buyers could swarm the market and cause huge demand for homes once again across Denver. However, if interest rates continue to remain high and buyers continue to hold off on purchasing until they come down, it’s likely we will see inventory levels continue to climb and values stay flat. Unfortunately, there’s no crystal ball to tell us which path Denver’s housing market will take. However, what you can count on is TK Homes being here each month with our Denver Monthly Update to ensure you’re staying up to date on current Denver market conditions and trends. Homebuyers and sellers can also be comfortable knowing that, as of right now, values seem to be staying well protected, continuing to make Denver a safe real estate market to own and buy in.

 


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

 

 

 

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