Market Updates »
There’s no question about it, fall is here. We know this with the changing colors of the leaves, the pumpkin flavored everything everywhere and the slowed Denver real estate market. The only question we have left is, have we seen all of the slowdown for the season, or will it continue to cool with the fall temperatures?
An old real estate fact is that you can determine the near future market conditions by looking at the higher end homes. It’s common knowledge among real estate professionals that a change in the market is often first seen in these higher price points (for detached single-family homes we’re talking $750,000 and higher and for townhomes/condos we’re talking about anything above $450,000). Right now, we are seeing a very common trend in these properties.
What we are seeing in the higher priced homes are price reductions and lots of them. In fact, TK Homes’ clients looking in this price range are telling us that roughly 50% of the emails they are getting regarding new or update homes for sale in this price point are price reductions. However, this is not being seen across the board or with every higher priced home. In fact, if the home is priced correctly, it’s still going under contract in the first week and often with multiple offers and over list price. This is due to there still being historic low inventory and low interest rates. We are also seeing the entry level and mid-level homes (for detached single-family homes we’re talking anything under $650,000 and for townhomes/condos anything sub $400,000) selling very quickly and often for over list price. However, even these homes are seeing a new trend.
Even just a month or more ago it was not uncommon to see a home sell for $50,000 or more over list price. Now, this would be considered unusual, even in that entry and mid-level price range. On average, we’re only seeing offers $5,000 to $15,000 over list price. Getting inspections, appraisals and financing conditions waived is also becoming more of a memory versus reality for buyers.
These market trends are encouraging for buyers who have been left feeling beat up and almost hopeless from the summer market conditions. Right now, the big question is, will the higher priced home trend continue to move down the line to the entry and mid-level priced homes? Personally, I am not sure it will.
In order for this to happen, we’d need to see fewer buyers and more inventory. Right now, the buyer pool is definitely smaller, but the inventory level is even smaller than the reduced number of buyers. This price point is always going to struggle with inventory simply because there are no new homes being added in this price range. Builders are focusing on the higher priced townhomes and detached single-family homes. This means the only inventory for the entry level and mid-level prices will be existing homes, where the higher priced homes have inventory being added from existing homes and new builds; this right here could be the biggest reason the fall slow is affecting the higher priced homes at a higher rate than the entry level and mid-level homes.
As we write this article, the current Denver real estate market feels like most recent seasonal slowdowns. However, like every previous year, we will continue to monitor the stats, listen to buyers, see what sellers do, and carefully analysis this data to see if there is more going on in the market than just a normal seasonal slowdown. Be sure to subscribe to our newsletter to be updated monthly on the current market conditions.
~ Article written by Team Leader & REALTOR®, Trevor Kohlhepp