January 23 Housing Market Update
It has been a whiplash kind of month in the Denver Metro Real Estate market. We went from homes sitting for 45 plus days since June of 2022 to stale listings getting re-listed and going Under Contract with multiple offers again. In September, October, and November of 2022 Buyers were asking and getting cash at closing to buy down rates, multiple inspection items repaired and the luxury of being the only buyer coming forward with an offer on a home. This trend continued through December of 2022 but after the first weekend in January the race was on for Buyers. The question all of us are asking on behalf of our buyers and sellers is, “Is this the beginning of a trend or just a seasonal collapse of new inventory combined with interest rates settling in and strong pent up buyer demand?”
I hate to say it again, but inventory continues to be the bear in the woods for our Market. January saw the smallest number of new listings (2,858) ever added in that month, the previous record was set in 2022 (3,3485). Active inventory at the end of January 2023 was 13% lower landing at 4,120 than the month before. Are we switching our hot selling season from the Spring and Summer to Fall and Winter? Is Q1 going to be the new hot time to sell your home? I don’t think we can come to that conclusion yet, but it might be worth looking at if it happens next year or if the market continues its cha-cha-cha through March of 2023. With almost 40% of all homes in Colorado owned out right and 86% of all mortgages held have a 5% or lower interest rate it is hard to see the inventory belt loosening soon.
January 2023 Insights:
(Stats Reflected here are MoM December to January)
Active Inventory: 4,120 down 13.9%
Closed Sales: 2,041 down 29.3% (This appears to us as an inventory crunch)
Average Close Price: $626, 311 down 1.49% (even though we are down this price is also a record high for the Month of January)
Days On Market: 46 up 6.98%
The first quarter of 2023 will have a cloud over head when compared to Q1 of 2022. We ended the year with median price growth of 12% all gained in the Q1 of 22. In January we saw a decline of price growth from December to January of 3.33%. We are guessing the pressure on sellers to sell their homes that had been sitting for too long brought about aggressive price reductions to get their homes finally sold. We will see this number climb or flatten when February stats come out in March. If inventory pops over the next couple of months to meet Buyer demand, you will see home prices soften. If those new listings don’t start appearing and interest rates come down further, we will see pricing stabilize and maybe start growing again.
The Fed raised the Fed rate again by .25% on February 1st to 4.75%. He mentioned that we are seeing the pace of inflation slow but that we are not out of the woods yet. He still repeats that we need more evidence that the pace will continue to slow before he lifts his foot off the gas in terms of rate hikes. What differed this time was that if he saw the inflation rate dropping too quickly it may influence the feds to change course and possibly encourage them either slow or stop rate hikes. The other market segment that gives the Fed pause is the job market. That market continues to come in with historical numbers month over month. Wages are still increasing and those jobs that are being lost are being replaced almost immediately with new higher paying options.
In conclusion the market had some wins this past month not only locally but nationally. To say we needed some positive news about the housing market is an understatement. We are hopeful that we will see a more balanced market over the next couple of months. Sellers will get to sell at a reasonable rate in a more reasonable amount of time and Buyers will get to see and bid on homes without unreasonable pressures.
If you know anyone that is thinking of buying or selling a home, please keep us in mind. We love referrals and you have our word we will take great care and provide great service to them as we have to you!
We would like to thank DMAR for information and statistics used in crafting this article