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October officially marks the first month of the last quarter of 2024. If there is any question that Denver is approaching the end of the year, step outside in the early morning, and you can feel the cool, crisp fall temperatures in the air. Another milestone for 2024 was the recent announcement of the Fed’s first rate cut. It’s been a couple weeks now since the Fed’s announced the rate being cut, so have we seen a swarm of buyers flooding the Denver market?  The quick answer is: kind of. Let’s dive into the long answer.

The month of September started very much like August ended, very slow. Homes were sitting on the market with very few showings and even fewer offers. Even with interest rates trending downward in early September, buyers were just not taking action. Then, we got the news that the Feds were cutting their rate by .50%, which is double the amount of rate cut most experts were expecting to see.  Home sellers were hopeful this would trigger a buying frenzy we haven’t seen yet this year. This is where things get a little more interesting. To really focus in on how Denver’s market responded, we need to divide the market into two categories. The first category is your traditional home, valued anywhere below $1,000,000, and the second category is higher end-homes valued at a million and up.

Let’s start with the second category. Homes valued at a million or higher, which have been sitting on the market, did see an uptick in interest since the Fed’s rate cut; in fact, many have gone under contract since the announcement. It’s important to state this was not really the feeding frenzy that many experts were promising after a rate cut. However, these higher-priced homes saw increased showings and acceptable offers and are now working through contracts and towards the closing table. These same homes were sitting and almost completely ignored just a few days and weeks prior to the rate cut announcement.

Looking at the first category, homes priced below a million, the story is a little different. These homes might not be seeing any additional showings, and few are seeing offers. In many cases, these homes are seeing the same level of activity and interest as they were before the Fed’s announcement. So, why the two very different scenarios?

The answer, I believe, lies in how mortgage rates have responded since the rate cut. Just like TK Homes’ earlier prediction, mortgage rates have not fallen much, if any, since the announcement. The mortgage rates fell with the prediction of a rate cut by the Feds a few weeks before the official announcement. Due to this, we saw the two categories above respond differently after the rate cut.

Homebuyers looking at homes in that million-plus range tend to have more disposable income and are either paying cash for a home or the monthly payment isn’t as big of a determining factor. This means that, with the announcement of the rate cut, they decided to jump back into the market and purchase their next home before possible additional rate cuts. These cuts could bring interest rates down more, potentially causing values across Denver to rise. Due to this, we saw an uptick in buyer activity from buyers wanting to buy now before we see rates drop further and values go up.

Buyers in the first category, however, are usually more motivated by what their monthly mortgage payment is. Since interest rates have not yet fallen enough for them to see a major decrease in their mortgage payment, they are still sitting on the sidelines waiting for a more drastic rate cut before taking action.

Savvy homebuyers looking to purchase a home within the next 0-4 months should strongly consider jumping into the market now. If interest rates trend downward even more, it’s not unrealistic to believe we’ll see increased buyer interest. If enough buyers jump back into the market, homes might begin selling quicker and for less favorable terms for buyers than we’re seeing now, especially in the below one million price point. Then, as the interest rate continues to trend downward, refinancing into a better rate in a year’s time would allow buyers to maximize their realized appreciation and lower monthly payments.

There is great opportunity for homebuyers and sellers across Denver with today’s current market conditions. If you’ve been waiting to make a move, contact a TK Homes agent today. If now isn’t the right time for you, remember to come back on the first Thursday of every month to learn about Denver’s market conditions with our monthly market update blog!

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