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Recent days have finally started to feel like the Colorado spring we all love and look forward to, with warmer weather, green lawns, and longer days. When you consider it’s already May, this feeling is actually well overdue. Similarly, it’s hard to believe that we have already started our 2023 real estate rush as we head into the summer months. Maybe this is hard to believe because of how relaxed the market has been compared to the previous spring markets of 2022 and 2021.

 

The good news, for homeowners at least, is that values are up year to date. With the past few months seeing solid movement in the market, homes are seeing roughly 5-7% appreciation since January lows. This might make buyers feel like they missed their opportunity to buy; however, remember that from 2022’s peak values in April, we saw a 10% depreciation through December. This means most homes are still sitting below their all-time high values which we saw in 2023. Furthermore, historically we see the year’s highest amount of appreciation from February to June. This year is following this trend so far.

Right now, homes priced correctly are commonly seeing 2-5 offers, with the winning offer usually being over list price. However, these over list price offers do not look the same as they did this time last year. A common over list price offer is around $5,000 to $20,000 over the asking price. Another big difference is that these winning offers are not having to waive their right to ask for items to be addressed during inspection; buyers have a lot more control and options during inspections with today’s market.

 

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Due to buyers having more control and options during inspections, we are seeing many buyers choose to walk a line of caution and terminate more frequently due to inspection items. This is important for sellers to remember as they work to prepare their home for sale and negotiate with the buyer on inspection items. However, the flipside to today’s market is many appraisers are still using comps from previous highs, meaning we’re not seeing many low appraisals to date. This might change in the upcoming months when closings from the fall lows become more favorable to appraisers.

 

Overall, Denver’s real estate market is moving in a direction that is more relaxed for buyers, giving them more options and control over the transaction while giving opportunity for sellers to move their homes quickly and at higher prices than just a few months back. There are two factors TK Homes is watching as we head into the summer months.

The first is interest rates, which have remained high throughout 2023. If we see these decline and even break into the 5’s over the next few weeks and months, it could drive a handful of buyers back into the market. An influx of new buyers could quickly reduce our already historically low inventory, causing values to spike in the 3rd quarter of 2023 and take away some of the extra control buyers are enjoying today.


The second item we’re watching is the number of new homes hitting the market. Historically, we see the highest number of new homes hitting the market in June. If this trend continues and interest rates remain high, they could keep buyers out of the market. In this case, values could level off or even drop earlier than our normal fall seasonal slowdown. However, if sellers continue to stay in their homes to keep their extremely low interest rates, then we might not see higher inventory levels as we head into the summer months.

There are a couple of different scenarios with the two unknown stats mentioned above, and until we’re in it, we won’t know which scenario will play out. However, rest assured, TK Homes will continue to provide an easy to follow and real-time update on Denver’s real estate market on the first Thursday of each month. Subscribe above to be sure to be notified as soon as it’s released. In the meantime, if you’re thinking about selling, buying, or investing in the Denver real estate market, contact a TK Homes agent today and know you’re getting the best advice and service based on today’s market conditions.


 


~ Written by CEO/REALTOR® Trevor Kohlhepp

 

 

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