By Eric Heinz
Single-family homes in North Denver continue to be more expensive than the rest of the metro area, but prices are not rising as quickly as they had in the last few years since inflation increased costs and interest rates jumped to levels not seen since the mid-2000s.
Matt Leprino, a spokesman for the Colorado Association of Realtors, told The Denver North Star that prices cooled quickly once interest rates rose.
“It had almost an overnight effect, the minute interest rates started changing,” Leprino said. “We have actually seen a steady decrease of the median price in the metro area since April of this year, and we’re not talking huge decreases.”
Leprino said despite the median home price in the region has been dropping every month since April, it’s still higher than last year. He said the median selling home price in the Denver Metro Area, which includes several nearby counties, for October was $660,000, 17.6% higher than October 2021. Leprino said the average number of days homes are on the market has crept upward as has the amount of available housing, but homes are still selling quickly.
“There are no alarm bells being sent by us, that’s for sure,” he said, regarding whether homes are selling. Specific to Northwest Denver, the average closing price for homes was $953,715 in October 2022 compared to $795,282 in October 2021, an average gain of 19.9% year-over-year.
Jenny Apel, a real estate broker with Denver- based Nostalgic Homes Group-Compass, compiled data for The Denver North Star within the borders of the city north of Colfax Avenue and west of I-25.
“Sellers are receiving an average of 98.7% of their final list price, but have taken on average a 1.6% price reduction before reaching the point where their home contracts,” Apel said. “Last year sellers were receiving an average of 100.6% of their original ask price. Yes, interest rates have slowed things down a bit.”
According to the Federal Home Loan Mortgage Corporation (Freddie Mac), mortgage rates nationally were about 3% at the start of the year and as high as 7.25% this fall.
“Mortgage interest rates fell to record lows in 2020 and 2021 during the COVID pandemic. Emergency actions by the Federal Reserve helped to push mortgage rates below 3% and keep them there,” wrote Peter Miller in a November article in The Mortgage Reports. “But with inflation surging to four-decade highs, mortgage interest rates rose quickly in 2022. And policy tightening by the Fed could push them higher still. Those who are in a position to lock an interest rate sooner rather than later may be wise to do so.”
Apel said generally speaking, first-time buyers in Northwest Denver are not what would be considered “typical.”
“They have to be more affluent in order to qualify for the payment and commonly have family assistance for down payment,” Apel said. “These folks are generally less affected by changes in interest rates versus first-time buyers purchasing in more affordable neighborhoods, given the average sales price here is high.”
Apel said available housing inventory, measured in months, was higher than last year, but there’s still not enough to balance supply and demand.
“What has dropped off dramatically is the volume of sales which is down by 45.8% from last year,” Apel said. “One would think that such a drop in buyer activity would have a devastating effect on home prices, but new listing inventory is also down by a whopping 36.7%.”
Apel said rising mortgage interest rates meant a “good number” of would-be buyers opted to hold off, as did would-be sellers.
“Right now, buyers have far more ability to negotiate prices, inspection items, and low appraisals with a seller than they had a few months ago,” Apel said. “That truth coupled with home prices likely at their lowest point makes this the best possible time to buy, even if rates aren’t exactly where a buyer would like them to be.”
Apel said for sellers, this is an opportune time for them to find their next home and to plan on refinancing their mortgage in the coming months.
“No, you aren’t going to get the same price for your home now that you would have back in June. That boat has sailed,” Apel said. “Additionally, you will have to be more flexible and receptive to buyer demands, but you will receive far more for your home now on average than you would have last year at this time, and you will pay less for your next home right now than if you wait.”
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