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Interest rates are up, and they have been long enough that this is considered old news. However, there is a buzz going around local Denver real estate offices that these higher interest rates could mean sellers have missed the boat, and if they didn’t sell in first quarter of 2022, they lost out on the hot seller’s market we’ve been experiencing. So, is this true? The short answer: no.

In fact, if you made this statement to any buyer actively looking at homes these past several months, they might even laugh at you. This is because homes that are priced correctly are still selling fast, usually within the first couple days of being on the market with multiple offers mostly over list price. Going under contract $50,000 or more over list is also still just as common today as it was back in January before interest rates climbed into the 5’s. So, then why are the professionals in the industry making these statements? 

A simple answer could be they are hoping for change. This market isn’t just hard on buyers; it's also hard on agents working with buyers. Many great agents that work with buyers are having to work twice, three, or even four times as hard to get their buyers under contract. A slower market would give more opportunity to more buyers and allow agents to perform their jobs easier.

Another factor could be that we are starting to see more homes sit on the market before going under contract, which is new; however, the reason why they are sitting isn’t. Now that we’re entering the 5^th month of 2022 and the 5^th month of homes selling at, in some cases, as much as $100,000 over list, there are now enough sold comps to entice sellers and some agents to list their home at these higher sales prices. This sounds normal; however, what we learned last year from a similar market is this can cause your house to sit on the market. You see, buyers know that they likely will have to pay over list, in fact, well over list. This means that if a home starts at the last sales price of a neighboring home that recently sold, buyers viewing the property immediately believe they will have to bid $50,000 over that higher price and decide that the home is not worth that (if it was, then that neighboring property would have sold at that price just few weeks before). This causes buyers to pass on the house, and now it sits while everything else goes under contract. Once a home sits, it will usually sell at or near list price. However, let’s not forget this list price is still at the new highs based on the previous market. With more and more sellers starting too high, it gives a false sense that the market is shifting, when in reality, it’s simply a bad pricing strategy.

Now, we’ve said it before, we don’t have a crystal ball at TK Homes and cannot predict the future, so the above information is based on what is happening right now in Denver’s real estate market. I do believe that the market will shift and that these way over list offers will become a distant memory. I do not feel that the market is a bubble and that we will see values sink. However, it likely will level out and hopefully go back to a healthier annual appreciation. With all of this said, if you’re looking to take advantage of today’s market and think you might want to sell your Denver area home in next 1-12 months, I would recommend setting up an appointment with a TK Homes agent today to start creating a plan that makes sense for you and your situation. Don’t wait until you read an article from TK Homes saying that sellers in Denver have, in fact, missed the boat.  

~ Written by CEO/REALTOR® Trevor Kohlhepp