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It is official, fall is here, and that can be seen throughout Colorado with the beautiful changing of the leaves. Leaves off the trees aren’t the only thing that we are seeing fall this year across the Denver metro area.

 

10-05-22_October Market Update_inset.pngAs we’ve been stating in the last couple Denver Market Update blogs, home sales in most metro neighborhoods continue to struggle. The most common theme right now is values pointing in the downward direction, with nearly 2,400 recent price reductions on homes currently for sale in just the past seven days alone. It is not all bad news though. The continued trend has been, homes priced correctly can still sell quickly, often in the first 1-2 weeks and even in some cases with multiple offers and over list. 


However, the important thing to keep in mind right now when selling your home is that these over list and quick sales are now abnormal vs. the norm, and usually, the reason they are selling with this trend is for one of two reasons. 1. They are unique and offer something competing homes don’t; examples include extreme views (mountain, city, water), large outbuildings or garages and/or acreage. 2. They were priced aggressively for the neighborhood and maybe even priced low.  

 

The fact that there are homes--and more than just one or two here and there--selling with this trend is a positive sign of strong demand still being present. This is  especially good in the current high interest rate environment we’re in. This is encouraging and tells us once the interest rates do eventually come down, we could possibly see a quick stop in the downward trend and likely see values start up the other direction again. The big question right now is, how long are we going to be seeing these higher interest rates?

Recent Fed meetings have clearly indicated that interest rates are being raised to fight the high inflation. The Feds have stated they are expecting to do two additional rate hikes still in 2022 and at least one in the Spring of 2023. Now, these rate hikes do not impact mortgage rates directly, but they do typically follow a similar pattern: Fed rates go up, mortgage rates go up. This would mean that we can realistically expect interest rates to stay higher and potentially go even higher through at least the Spring of 2023. Once the Feds determine the rates to be at their peak level, next we will want to see them come down, and at this time, no one knows how quickly that will happen.

It would be my prediction that with the higher interest rates and lower values, we will continue to see a downward or best-case scenario a fairly flat market through the rest of 2022. Once we break into 2023, we should start getting a better picture of the Feds’ plan for rates moving past the Spring and how buyers are reacting/accepting the new rates.

 

Ultimately, buyers that are willing to stomach the higher interest rates and are confident that they are buying a home they will be living in for the next 5-10 years might have a window of opportunity to purchase during a down market. Then, they can wait out the next few months or longer until rates come down. After rates come down some, would be the time to refinance into a lower rate and enjoy the ride and equity as the demand floods back into the market causing values to rise once again.

If you’ve thought about buying or selling and have questions about what that looks like in today’s market, contact us today; we’re happy to help talk through different scenarios and help you decide if now is a good time for a move.

 

~ Article written by Team Leader & REALTOR®, Trevor Kohlhepp

 

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