In early January when the weather is running cold and dreary, real estate agents are sensing a puff of warm air in Denver’s housing market. That's following a year when rising interest rates, high prices and low inventory had chilled home sales.
In its January Market Trends Report for the 11-county area, analysts at the Denver Metro Association of Realtors continued seeing small, month-over-month drops in key indicators. However, they’re noting that the year-end picture is markedly better than it had been coming into 2023.
According to the new December numbers, inventory of homes on the market is up 4.5% year-over-year, with the average price up over 3% and pending sales up almost 11%.
The average amount of time to sell homes increased both month-over-month, and year-over-year, 46 days. That level stood at 38 in November, and 43 a year ago.
The news looks better still when the report focuses on single-family homes as opposed to townhomes or condos.
The median closed price of a detached home in the area, now at $613,500, was down 2% from November’s average, but up 2.25% from a year back. The average detached price, $733,116, was down a percent over the month previous, but up almost 4% year-over-year. Average prices, as opposed to median prices, can be skewed upward by a small number of very high-priced sales.
“Last year, the Denver real estate market was challenging as we dealt with a lack of inventory and interest rates that seemed to go up daily,” said Libby Levinson-Katz, who chairs DMAR’s Market Trends Committee, in a news release with the new numbers.
“Despite these issues, buyers and sellers found a way to come together in a stabilizing market,” she said.
Levinson-Katz noted that the new market bears some uncanny similarities to what the Denver area was seeing before the COVID-19 pandemic unleashed a tsunami of home sales that drove prices to record levels.
“When you look at the numbers from 2023, they’re really similar to 2019,” Levinson-Katz told The Denver Gazette.
Most striking is the similarity of the sales volume now versus during the pre-pandemic — $28.44 billion in sales in 2023 vs. $28.66 billion for 2019.
“Even though the inventory is lower (now), the median prices and sales volumes are similar,” she said.
Meanwhile, interest rates are now trending in the mid-6% range, down from a few months ago. Nevertheless, those rates are considerably higher today than three years back, and Levinson-Katz expects that any rise in prices will likely be kept in check with respect to what happened early in the pandemic.
“My prediction is that we’ll see an uptick in prices, but not the huge rise as when we had low interest rates, when people were sitting indoors, falling out of love with their homes,” she said.
Agents who have active listings to offer felt even more optimistic as the calendar flipped years.
“I think the market is pretty good,” said Barbara Henderson with Mile Hi Modern Real Estate — who has a newly renovated 2,000 square-foot loft condo that she’s brought to market in Ice House, the historic loft beside Union Station in Lower Downtown.
Henderson, who had marketed Ice House during its 1989 transformation from a produce storehouse to luxury lofts, said she put the current property on the market a few weeks back in the slow weeks leading up to Christmas, and had two showings.
But she expects it to draw plenty of interest now, even at its price of $1.55 million. She sold a similar 2-bedroom, 2-bath unit a floor above this one in October for $1.4 million, and another last May for $1.325 million.
“Either I’ve been lucky, or I don’t know,” Henderson said.
She added that similar sales over the past year have often been to cash buyers — a segment less affected by mortgage rates. Henderson senses more vitality in the historic blocks in Lower Downtown, with more people out walking the streets and dining, than during recent months.
“The story is still low inventory,” said broker Nancy Greager with Compass Real Estate, who with her team members Chrissy Graham and Jessica Peterson did around $30 million in sales last year in central Denver and city-suburban neighborhoods.
That picture could brighten as the inventory situation begins to correct over the first half of the year, Greager said, and further still if the Federal Reserve chooses to cut the funds rate.
Even now, she said, potential sellers could find the incentives to put their home on the market noticeably more attractive than during last year.
“If a property is priced well and in a good location, you will see bidding wars,” Greager said.
That effect could be stronger still in suburban locations, where comparative affordability tends to stand out with respect to comparable central-Denver neighborhoods. Regardless, she advises sellers to pay close attention to quality factors when bringing their homes to market, remembering that buyers have likely already done plenty of research.
“With the cost of financing being elevated, buyers are picky,” she said. “The message to sellers is to make sure your home is in excellent condition and well presented, to understand what’s going on in your neighborhood, and to price it competitively. Otherwise, you’re positioning your home to sit, and you will need to re-price it to get a new set of buyers.”
“I expect the selling season to start earlier this year than last,” DMAR’s Levinson-Katz said. “With pent-up demand, more favorable lending terms and warmer temperatures than last year, there is nothing stopping buyers from getting out there.”
DMAR’s Market Trends report includes data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties. DMAR represents over 8,000 Realtors in the metro area.
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