Market data from the month of September indicates the Mile High City’s red-hot housing market may be moving toward a place of balance.
It’s time for a reality check. With decreases in the number of homes sold and average home price, the Denver real-estate market experienced a slowdown in September 2017, according to the Denver Metro Association of Realtors’ October market report (of September data). Those moves, though small, may spur more dramatic shifts in the future.
Total sales of single-family homes and condos decreased by 21.58 percent between August and September 2017. Granted, Denver experiences a seasonal slowdown every autumn, but over the past decade, the average drop from August to September has been just 10.1 percent.
“Limited supply has always been an issue, but the big thing creeping into the market is affordability issues,” says Steve Danyliw, chairman of the Denver Metro Association of Realtors Market Trends Committee. “Higher prices and a limited supply are causing buyers to be more apprehensive.”
The average price for a single-family home decreased by 0.52 percent in September to $429,597, but that average has increased by 8.84 percent from September 2016. “With these high ticket prices, we’ve seen more buyers fall out of deals over inspection issues,” Danyliw says. “Buyers are struggling to buy homes at these prices and they are shifting their behavior.”
That means sellers can no longer put a house on the market on Friday and expect 10 offers by Monday. “Buyers are no longer responding to that feeding frenzy,” Danyliw says.
Even with the recent drop in the number of homes sold, the market is still ahead of 2016, as year-to-date closings are up 3.22 percent from last year. And, with active listings totaling 7,586 units (that’s single-family homes and condos), inventory is starting to creep back up—remember that all-time low in February 2017, when total available units dipped below the 4,000 mark?
Though it’s not yet a buyer’s market—Danyliw says it takes an inventory build-up of four months to shift the balance—with Denver home inventory now at 1.8 months for single-family homes, sellers are starting to face a reality check: Good homes will still sell, but at these high prices, better properties will sell faster.
The big takeaway for buyers? Though it’s still a seller’s market, the slowdown might give you some leverage when it comes to negotiating things like inspection items.
Despite the changes, Danyliw assures us that Denver is still an incredibly strong market. “It’s a hot market, but it’s not a scorching-hot market,” he says. “We’re just transitioning back to something closer to normalcy.”
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