Denver Real Estate Market update August
Even with fear, uncertainty, and doubt surrounding the economy in the face of the big “R” word, people are still buying and selling real estate. In fact, according to The Rueth Team and Denver Metro Association of Realtors (DMAR), there is a huge increase year-over-year in real estate listings. The market overview provided by DMAR’s Market Trends Report for August 2022 shows that there is an 81% increase in Active Listings at the End of the Month of July compared to last year! From the expert opinions provided in the report, these are early signs that the real estate market is becoming more balanced after the 3+ years of a ‘shifting market’. However, it is important to point out that, being balanced does not mean dropping prices. While headlines might suggest prices are decreasing with being 3.33 % down from the month prior, year-over-year the prices of the average single-family home remain up by 11 percent. So in short, the market is stabilizing and becoming more balanced with the recent factors.
buyers housing market on the horizon
“Every indicator points to the market shifting closer to a buyer’s market. The month-end active listings increased 21.53 percent last month pending and closed deals decreased and days in the MLS increased by 30 percent.” (Abrams, DMAR 2022). Despite indicators on the rise, they are still not enough to fully announce a buyers market is nearing anytime soon. There is still a lack of listings currently on the market and only just now has the average days on market started to get longer. Inventory and listing time need to compound a little bit more before the buyers will have the upper hand in Denver’s real estate market. As those factors build, home prices should slow down. Compared to last year when the average home price increase was around 17% year to date, we need the home prices to cool down.
Are we in a bubble?
“Are we in a bubble? Prices are high, interest rates feel high, the economy has taken a dip and buyer sentiment is down… uncertainties looming over potential buyers, a housing bubble should not be one of them.” (Abrams, DMAR 2022). Andrew Abrams is correct about a housing bubble being a far-away concern. The evidence falls under the classic supply and demand, housing inventory is still low and the demand remains higher than ever. The recent interest rate hike has not incentivized people to sell. The same can be said for those who might have considered buying. This will change and will likely need time to settle throughout the year but none are signals for a housing market bubble.
Are we in a recession?
Technically, yes. According to the definition, if the GDP experiences two consecutive quarters of contraction then the economy is in a technical recession. However, the National Bureau of Economic Research has not announced it and is therefore not official. In fact, other measurements point out that we are far from a recession. Overall, people looking to buy or sell a home should not be dissuaded from entering the housing market. The primary focus is on the recent inflation and strategies to combat it. Overall, the buyer sentiment is what matters here for the housing market and will continue to create ripples until concerns are quelled.