“According to Forbes, Denver, and Colorado Springs are included in the handful of markets that are forecasted to see the highest inventory increase this year, peaking in September-November"

One year ago, in April of 2022, the 11-county Denver Metro area witnessed the highest historical median closed price of $625k. Last month, Denver MLS reported the same stat to be $570k. The 2022 Spring market hit undeniably earlier than usual and seemed to end just as quickly as the Fed began raising rates.

 As we are seeing seasonal value improvement from this January, things certainly are not moving as quickly as in the last couple of years. While at this time last year, we had one week of inventory, current numbers reflect us sitting at six weeks. What does this mean? In a nutshell, signs indicate that the market is simply returning to normalcy. Over the past several months, we have seen the real estate market become more traditional in the sense of welcoming the art of negotiation back into the game.

 I wouldn’t dare to say that we’re on even playing ground quite yet, however. The increased weeks of inventory can be more attributed to falling sales than the addition of new listings. The obstacles keep changing for buyers. Previously up against bidding wars, then came the onset of rising interest rates, and now the ‘lock-in’ effect is ever-present. And we have some friends that are feeling this right now! Despite some of the current challenges for buyers, there are some upsides. Most sellers are now expecting concessions, and the reward for pricing a listing competitively right from the start is not to sit on the market wishing things would change.

 The reality is the Denver metro has undergone an inventory decline of almost 20% between December 2019 and December 2022 (source). The lack of availability caused buyers to bid up (with delusional audacity) to secure a home. That close price would set precedent for the neighboring homes, and appraised values kept shooting upward. During COVID, drive-by appraisals were not uncommon, which would not even allow an appraiser to perform an in-person inspection but rather rely on pictures, area knowledge, and other digital means to find fair value. Many appraisals were even waived, meaning the lender may not have been adequately performing practical due diligence. And now, Fannie Mae’s Value Acceptance + Property Data may be the beginning of the end of traditional appraisals altogether (source).

 Back to the point, the Denver Metro market needed a cool down. The prices pushed people out of the home-buying market, which affects end buyers and investors alike. Rent rates of studios and 1-bedrooms have leveled off from a year ago in Denver and decreased by 5% in 2-bedrooms. However, Boulder has seen around a 50% rate increase in 1-bedroom rentals, while in Parker, 1-bedrooms are 35% less than a year ago.

 According to Forbes, Denver, and Colorado Springs are included in the handful of markets that are forecasted to see the highest inventory increase this year, peaking in September-November (source).

 Fingers crossed.

Jessica Jones