BUYERS
1. MORE OPTIONS: Inventory levels in the Denver Metro have surged to their highest in over a decade, offering buyers more choices and the opportunity for greater flexibility than in years past.
2. NEGOTIATION POWER INCREASE: With a 30% drop in sales volume compared to peak years (2013, 2020, and 2021), buyers had greater leverage to negotiate terms.
3. AFFORDABILITY CHALLENGES: In October 2024, the average sold price was $721,208, with a 6.51% mortgage rate, raising monthly payments to 38.3% of median income—well above the 28% affordability threshold.
4. SUBURBAN SURGE: Suburban areas north, west, and southwest of Denver experienced a surge in activity, with months of inventory between 1-2 months, indicating competitive markets.
5. HIGH FALLOUT RATES: A notable rise in deals falling through—driven by inspection issues, HOA terms, insurance affordability, or buyer hesitation—emphasizing the importance of thorough buyer due diligence throughout the contract process.
1. INCREASED COMPETITION: Active inventory reached its highest levels since 2013, with October 2024 inventory up 44% year-over-year, making it harder for sellers to exit successfully.
2. LONGER DAYS ON MARKET: With a more balanced market, homes took longer to sell (averaging between 26-40 days) compared to the hyper-competitive pandemic years.
3. CONCESSIONS BECAME THE NORM: 60-70% of sellers offered concessions averaging $9,000-$11,000, often used towards buyer closing costs or temporary rate buy-downs.
4. SPRING LISTING SURGE: Many sellers took advantage of the spring market, listing earlier than in past years, with new listings up 30% year-over-year in April and May.
5. INCREASED INSPECTION CHALLENGES: Inspection-related terminations were common, as buyers demanded repairs or updates that many sellers were unwilling or unable to accommodate.
LOOKING FORWARD
1. CONTINUED INTEREST RATE VOLATILITY: Mortgage rates are unlikely to drop below 5%, but temporary fluctuations could occur depending on economic conditions.
2. FOCUS ON CREATIVE SOLUTIONS: Sellers may continue offering concessions, and buyers might explore adjustable-rate mortgages or temporary rate buy-downs to manage costs.
3. SUBURBAN STRENGTH + URBAN RECOVERY: Suburban markets are expected to maintain months of inventory between 1-2 months, while central Denver neighborhoods with 5-8 months of inventory may see gradual recovery in the early spring market.
4. POLICY + ECONOMIC SHIFTS: Property taxes are projected to increase by 32-54% for median-priced homes over the next few years, further influencing affordability. Additionally, plans for deregulation in housing development could lower construction costs and increase supply.
5. NEW NORMAL: As we move into 2025, adapting to current market conditions will be essential. Increased inventory and higher interest rates in 2024 have led sellers to adopt more creative strategies, while buyers gained back negotiating power. Although a busier spring market is expected, market dynamics seen in 2024 are likely to continue.
Organized with the help of our friends at First American Title
