Last year was a story of sharp contrasts in the metro Denver housing market, with an active and overheated first half replaced by a colder and quieter second half. But in 2023, the storyline is following the arc of a resilient wanderer struggling to chart a course in unfavorable conditions.
Home and condo sales are down by about a quarter in June compared to where they were the same month a year ago – 4,109 this June compared to 5,472 last June, according to the latest Market Trends Report from the Denver Metro Association of Realtors.
For the first half of the year, there were 21,534 homes sold compared to 28,027 in the first half of 2022 and 30,433 in the first half of 2021. The region’s residential real estate industry has generated $4.8 billion less in transaction volumes this year than last.
A lack of affordability and an unexpectedly large drop in new listings have contributed to the reduced sales volume. But there is also a sense that a lot of would-be buyers are waiting for mortgage rates to shift lower before launching, even as the dark clouds of a recession loom in the distance.
“There are many would-be buyers out there who will be ready to jump in once rates start to decline. Now if only we had a crystal ball and could determine when that may be,” said Libby Levinson-Katz, chairwoman of the DMAR Market Trends Committee and a Realtor, in comments included with the report.
Those buyers will have more inventory to deal with. The number of active listings rose 16.1% in the past month, from 5,228 in May to 6,070 in June. That supply, while flat with year-ago levels, is about double the record-low levels reached in June 2021.
The higher inventory mostly reflects a slower sales pace, given that new listings are down about 27.2% year-over-year, although they did manage to jump 8.7% from May. With many owners sitting on very low-rate mortgages they would prefer not to surrender, the incentive to list a property is reduced.
Despite that weaker pace of activity, home prices have found a way to rebound from recent lows. The bottom isn’t falling out as it did in the second half of the ’00s, which unleashed a horror story of defaults and foreclosures.
The median sales price of a single-family home in metro Denver in June was $655,000, unchanged from May, and down 2.24% from the $670,000 reached in June 2022. For condos and townhomes, the median sold price was $420,000, down 1.2% from May and off 2.3% from the median price of $430,000 in June 2022.
Steve Danyliw, a past chairman of DMAR’s Market Trend Committee and Realtor, noted in the report that home sales dropped much more sharply in the first half of the year than forecast, but that home prices will likely end the year down 4% to 6%, even though mortgage rates are running ahead of expectations.
“Our housing market continues to navigate uncertain terrain as we strive for stability,” Danyliw said. “Buyers, sellers and the industry that serves them will need to exert greater effort in finding viable patterns to successful transactions. The encouraging news is that in the face of adversity, our industry has consistently demonstrated its ability to adapt and overcome challenges.”
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