Metro Denver home sellers in the spring could reasonably expect to get a listing under contract in a week or less, especially for lower-priced properties. This fall, they should now mentally prepare for a month or more.
In September, the time a listing spent on the market averaged 26 days, more than three times as long as was the case in April, when listings were claimed in an average of eight days, according to a monthly update from the Denver Metro Association of Realtors.
That statistic is one of many that highlight the shifting balance of power between buyers and sellers in a market that is slowing significantly as interest rates on a 30-year mortgage approach 7%.
“I believe we are moving toward a balanced market, which we haven’t seen in over 16 years,” Libby Levinson-Katz, the incoming chairwoman of the DMAR Market Trends Committee, said in comments accompanying the report. “The market is entering a period of neutrality where the bullish ways of extreme markets make way for a stage of compromise, with buyers and sellers working together for a win-win experience.”
There were 7,683 homes and condos listed for sale at the end of September in metro Denver, 10.7% more than in August and 93.5% more than were available in September 2021. That may seem like a big jump, but the number of properties available to buyers remains less than half the 15,663 listings averaged in September going back to 1985.
One thing that is keeping the market from going into a freefall is that sellers aren’t dumping properties and glutting the market as they did in the late 2000s. There were 5,237 new listings in September, which is up 1.3% from August and down 14.6% from a year earlier. If higher interest rates knock potential buyers out of contention, they also leave sellers hesitant to abandon a comfortable mortgage payment to pursue something different.
At a 30-year mortgage rate of 7%, the payment on a typical Denver home would run $3,322 a month, which is 78% higher than the typical payment a year ago, when rates were closer to 3%, according to an analysis by Zillow. Effectively, that buyer is paying $1,452 more per month on a similar home than if they pulled the trigger a year earlier. And to even quality, they need significantly more income.
A survey that Zillow sponsored found that nearly 7 in 10 prospective buyers would end their search if interest rates crossed above 7%. Mortgage applications to purchase a home fell 14.2% in the week ending Sept. 30 from the prior week. They are down 37% from a year earlier, according to the Mortgage Bankers Association.
The number of completed home and condo sales in metro Denver fell to 4,114 in September, down 8.4% from August and 27.6% from a year earlier. The median sales price for single-family homes was $632,000, down 2% from August and up 9.7% from a year earlier. The median price of a condo or townhome sold was $410,000, up 2.7% from August and 7.9% from Sept. 2021.
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