What in the world is going on with the Denver housing market?

Denver, Colorado
Market Trends & Data
3yFollow

What in the world is going on with the Denver housing market?

Kenny Smith
Real Estate Agent · Denver, CO · Member since 2022 · 356 posts · 228 votes

...what in the world is going on with the Denver housing market?

1. Inventory is very low - for all of the homeowners that bought or refinanced during COVID that have a sub 3.5% interest rate don't want to sell when rates are at 7%. Why? If they are trading up, why trade a 3% rate for a 7%. We may continue to see inventory issues until sellers feel there isn't a huge gap in rate exchanges when trading up.

2. Luxury housing has slowed - the entry level home in Denver still stands at roughly $500k-$600k. During COVID, folks were able to afford a little bit more seeing rates were so low and their monthly mortgage was kept down. Now, they are getting priced out of those more expensive homes because of affordability with rates. Now, there the entry level home price point of $500k-$600k has seen a huge uptick. A nice home priced right and in a good location, is still selling quick!

3. Rates will ulimately decide where the market goes - having already mentioned the importance of rates to sellers..rates of course, have a huge effect for buyers as well. Some buyers are considering waiting until rates to drop to get into their home. Seeing a large numbers of buyers are considering this strategy, if rates do drop and many get into the market at the same time, this will likely cause home prices to go back up.

Bottom line - we need more inventory. Inventory would put us in more of a balanced market for both buyers and sellers.

Thanks for reading!

5Reply
43 views

Most Popular Reply

Matt M.
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
3y

Inventory will suffer for the foreseeable future. The only people moving are from divorces, deaths, relos, first timers and cash buyers. The move up market is dead. People are making things work in their current homes, however people are running out of savings. HELOCs are getting tapped along with cash out refis. The next thing will be job loss, then starts another round of foreclosures/short sales. There is your inventory. We had 50k+ homes on the market when I was doing REOs.

Baring something catastrophic, rates won't be back down for a LONG time. Could be years... Plan accordingly. 

2Reply
See this reply in the discussion

10 Replies

Jump to latestLatest
  • Matt M.
    Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    3y

    Inventory will suffer for the foreseeable future. The only people moving are from divorces, deaths, relos, first timers and cash buyers. The move up market is dead. People are making things work in their current homes, however people are running out of savings. HELOCs are getting tapped along with cash out refis. The next thing will be job loss, then starts another round of foreclosures/short sales. There is your inventory. We had 50k+ homes on the market when I was doing REOs.

    Baring something catastrophic, rates won't be back down for a LONG time. Could be years... Plan accordingly. 

    2Reply
  • John Clark
    Member since 2018 · 1k+ posts · 1k+ votes
    3y
    Quote from @Kenny Smith:

    Bottom line - we need more inventory. Inventory would put us in more of a balanced market for both buyers and sellers.

    Thanks for reading!

    The only people who want a balanced market are those who aren't in the market. Buyers want an unbalanced market of plenty of inventory and few buyers. Sellers, vice versa.

    We've had a min-bubble (how many times in the past few years did you hear the word "froth" when the housing market prices were discussed? Froth is simply small bubbles.) that now has to correct by bleeding out some of the air. That will take time.
    0Reply
  • Madison McCarthy
    New to Real Estate · Parker, CO · Member since 2022 · 2 posts · 0 votes
    3y

    I am wanting to get my first property and house hack to reduce my current living expenses. Ideally, the property would cashflow when I move out in a year or two. My main concern is that the value of any property I buy will decrease drastically in price as the rates are likely to stay high. If properties drop in price, then other people will be able to decrease their rent while mine would have to remain high if I want to meet the bottom line. Worse case scenario, I lose equity and have negative cashflow. I'm wondering if I am being too near sighted and given enough time rent and house prices will surpass what they are today.

    0Reply
  • Matt M.
    Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    3y
    Quote from @Madison McCarthy:

    I am wanting to get my first property and house hack to reduce my current living expenses. Ideally, the property would cashflow when I move out in a year or two. My main concern is that the value of any property I buy will decrease drastically in price as the rates are likely to stay high. If properties drop in price, then other people will be able to decrease their rent while mine would have to remain high if I want to meet the bottom line. Worse case scenario, I lose equity and have negative cashflow. I'm wondering if I am being too near sighted and given enough time rent and house prices will surpass what they are today.


     You should be able to qualify on your own and be comfortable paying the mortgage. If you can't, now is not the time to risk it. 

    1Reply
  • Trevor Richardson
    Real Estate Broker · Reno, NV · Member since 2023 · 267 posts · 297 votes
    3y

    To me interest rates, inflation, jobs are all distractions from the underlying issue. The country does not have enough housing supply to stabilize the market. I’d consider Denver a mountain west market, we are seeing the slowness of 2022 already evaporating here in Reno like overnight. 3-4 months ago it was doom, no buyers as the western markets started to correct, now it’s right back to multiple offers, rising prices. Builders are pulling incentives because they are getting back to waiting lists. Whiplash. We don’t have enough housing.

    The housing supply/demand curve imbalance does not give a rip about interest rates when people still have equity. 

    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y

    Job loss is coming. Savings have been drained, debt has been maximized, when job loss comes you'll start seeing some people move down. That's the next domino to come, Powell pretty much said it's inevitable. I would be surprised if Fed Funds doesn't get near 6% before stalling. There will be some blood on the streets. Market specific is obviously going to be the case, but I think you'll see inventory trick up. You'll also see people use every tool in the book before selling, such as renting extra rooms out(even as a family). We still need equities to get whacked harder before real estate. I mean rate hikes started when June, July? We're not near the feeling of the pressure of it...that'll be at least a year from it. Plus, with limited inventory, maybe even longer. It's the rental market that'll collapse first, locally, before housing. 

    0Reply
  • Madison McCarthy
    New to Real Estate · Parker, CO · Member since 2022 · 2 posts · 0 votes
    3y
    Quote from @Matt M.:
    Quote from @Madison McCarthy:

    I am wanting to get my first property and house hack to reduce my current living expenses. Ideally, the property would cashflow when I move out in a year or two. My main concern is that the value of any property I buy will decrease drastically in price as the rates are likely to stay high. If properties drop in price, then other people will be able to decrease their rent while mine would have to remain high if I want to meet the bottom line. Worse case scenario, I lose equity and have negative cashflow. I'm wondering if I am being too near sighted and given enough time rent and house prices will surpass what they are today.


     You should be able to qualify on your own and be comfortable paying the mortgage. If you can't, now is not the time to risk it. 

    I qualify for everything on my own. I have the savings and job to support getting a house. It's the scenarios mentioned above that are causing hesitation. Part of me wants to wait a year to see if housing prices drop, the other part of me is thinking about how much I could be saving each month if I HH. There's a lot of what-ifs and it's a very delicate line between being a money sink or a great step forward for the future.
    0Reply
  • Matt M.
    Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    3y
    Quote from @Madison McCarthy:
    Quote from @Matt M.:
    Quote from @Madison McCarthy:

    I am wanting to get my first property and house hack to reduce my current living expenses. Ideally, the property would cashflow when I move out in a year or two. My main concern is that the value of any property I buy will decrease drastically in price as the rates are likely to stay high. If properties drop in price, then other people will be able to decrease their rent while mine would have to remain high if I want to meet the bottom line. Worse case scenario, I lose equity and have negative cashflow. I'm wondering if I am being too near sighted and given enough time rent and house prices will surpass what they are today.


     You should be able to qualify on your own and be comfortable paying the mortgage. If you can't, now is not the time to risk it. 

    I qualify for everything on my own. I have the savings and job to support getting a house. It's the scenarios mentioned above that are causing hesitation. Part of me wants to wait a year to see if housing prices drop, the other part of me is thinking about how much I could be saving each month if I HH. There's a lot of what-ifs and it's a very delicate line between being a money sink or a great step forward for the future.

     Then I'd buy now. Rates will go up probably into the 8s and maybe 9s. While the prices might decline, the payment amount won't. I wouldn't worry about timing the bottom, because you won't. If you hold on long enough, it doesn't matter the price you paid as it all comes back. Denver has been 6% appreciation for the past 50 years IIRC. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Matt M.:

    Inventory will suffer for the foreseeable future. The only people moving are from divorces, deaths, relos, first timers and cash buyers. The move up market is dead. People are making things work in their current homes, however people are running out of savings. HELOCs are getting tapped along with cash out refis. The next thing will be job loss, then starts another round of foreclosures/short sales. There is your inventory. We had 50k+ homes on the market when I was doing REOs.

    Baring something catastrophic, rates won't be back down for a LONG time. Could be years... Plan accordingly. 


    what we are seeing in the PDX market which is priced about the same.. in our little housing community we are building and selling.  the FHA buyer ( up to 600 and something) is non existent. Although I am closing one on Monday for 675k and I only had to give a 5k seller credit so sold for full price.  The other sales I have going are basically all cash.. these are retired folks who own their current homes free and clear and all of those are at or under 500k which that market is still moving.. They are buying 800 to 900k homes from me as stated for cash or maybe putting a small mortgage on it for say 100k or so . But the market has picked up dramatically compared to August till mid Feb.. I think folks are realizing waiting is not going to get them anywhere.  So my wife wrote up another one yesterday against at 675k with no concessions and listed their 500k house.  And we have 3 to 4 more very serious buyers coming back for second and third looks.  

    I like to tell folks Instead of a market where you had over bids of 50 to 100k and 3% rates now you have no over bids higher rate so it comes out in the wash in the long term  .  Again for those that can afford the new rates..  But inventory is drying up again.. I know we have slowed production. And those higher priced homes are all sold  PRE sale  get the contract get a big non refundable deposit then build it for them.. Folks like that too as they can then pick colors and finishes. And gives my a chance to sell upgrades .

    So for us Q 3 Q4 2022 was not good Q 1 Q2 23 is heading in the right direction and we have not had to take any massive price cuts.. or lower our quality. Some of our competition to lower price points have gutted the houses of all the things we include as standard features.
    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Kenny Smith
    OP
    Real Estate Agent · Denver, CO · Member since 2022 · 356 posts · 228 votes
    3y
    Quote from @Madison McCarthy:
    Quote from @Matt M.:
    Quote from @Madison McCarthy:

    I am wanting to get my first property and house hack to reduce my current living expenses. Ideally, the property would cashflow when I move out in a year or two. My main concern is that the value of any property I buy will decrease drastically in price as the rates are likely to stay high. If properties drop in price, then other people will be able to decrease their rent while mine would have to remain high if I want to meet the bottom line. Worse case scenario, I lose equity and have negative cashflow. I'm wondering if I am being too near sighted and given enough time rent and house prices will surpass what they are today.


     You should be able to qualify on your own and be comfortable paying the mortgage. If you can't, now is not the time to risk it. 

    I qualify for everything on my own. I have the savings and job to support getting a house. It's the scenarios mentioned above that are causing hesitation. Part of me wants to wait a year to see if housing prices drop, the other part of me is thinking about how much I could be saving each month if I HH. There's a lot of what-ifs and it's a very delicate line between being a money sink or a great step forward for the future.

    @Madison McCarthy

    All valid concerns!  I think it all depends on what type of strategy your are implementing, in what location, what price point, if your renting vs already a property owner, etc.

    If you think it would be of any value to hop on a call to chat through some options, shoot me a private message!

    Best, 

    Kenny

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free