Seasonal Shift, not Housing Freeze
As the housing market slows, many clients ask me why real estate is slowing down and if this indicates a crash is coming. The Denver market is settling into familiar seasonal trends with the arrival of cool Fall weather and the expectation of the holiday season quickly arriving. Typically, competition is fierce in the summer as families move before the kids start school and sales slow in the Fall before hitting the least amount of activity in the winter.
Seasonal trends are back
Many September data points indicate a return to these seasonal trends. Days on market ticked up. Inventory increased ten percent from the prior month. Prices held steady as the average ticked up less than a percent and the median dipped half a percent. All of this indicates a seasonal slowing, but no significant change to the broader seller’s market. There is still a significant housing shortfall: active listings remain 25% below last year, with under just 1 month of total inventory.
Lawrence Yun, chief economist of the National Association of Realtors®, confirms this. “Things are settling down. There will still be some multiple offers, but it will be less tense,” says Yun. “It’s not like the market is soft,” says Yun. “It’s just moving away from that extreme frenzy.”
There is still an inventory supply problem
The Denver Market Trends Report predicts that “supply is still the problem, has been the problem, and will be the problem going into 2022.” According to Realtor.com Chief Economist Danielle Hale, “The nation is still short about 5 million homes” and it may take between five and six years before there are enough homes for sale to meet demand.
Demand continues to increase
Furthermore, demand is not letting up. Demographic trends remain with millennials buying in record numbers and Denver continues to experience population inflows exacerbated by the rise of remote working. “You’ve still got a lot of young people who have still not bought a home but who would like to,” says Hale. “Anytime the market starts to coolm, you’ve got people on the sidelines waiting for their chance to get in. That keeps both home sales and home prices from declining too much.”
Opportunity awaits for those who take the right action
While Denver remains a strong seller’s market, working with a real estate expert to price and list competitively is more important now than ever. According to Yun, “some homes are lingering on the market for a week or two without an offer.” That can be a red flag and permanent strike against price in this market. Buyers also have an opportunity to capitalize on the cooling market before rising interest rates decrease affordability. If you have questions about the market, reach out to your trusted CJV Real Estate advisor.
-Chris Freeburg