Metro Denver swung sharply toward a buyer’s market this summer and will likely become more entrenched in that direction as activity slows in the months ahead, according to two leading real estate firms.
“Denver went from one of the hottest markets to one of the more challenged markets. Over the summer, sellers weren’t getting the traction they were hoping for,” said Jeannie Tobin, director of market analytics at Homes.com, a leading real estate portal.
Because of the rapid increase in supply this spring and summer, Homes.com officially declared metro Denver a “buyer’s market.”
Tobin, who covers Colorado, Utah and New Mexico, said the number of available residential listings in metro Denver reached a 14-year high in July and the inventory remains elevated at levels last seen coming out of the housing downturn.
A lack of affordability has left the market here more vulnerable to a dramatic shift. Although single-family home prices have bounced around in a narrow range since early 2022, Denver’s housing market remains the eighth most expensive in the country and the most expensive of any major metro area not near a coast, according to Homes.com.
The median price gain of a residential property sold in August in metro Denver rose 0.3% annually to $587,000. That is below the 2.4% gain seen nationally, according to Homes.com. In August 2021, metro Denver home values rose 17.4% annually. In August 2022, the increase was 6%. In August 2023, it was 1.3% and last year 0.6%.
“It is already a slower market, so judging by historical trends, I would say that prices are poised to come down through the remainder of the year,” Tobin said. Whether they stay down won’t be clear until the peak selling season kicks off next year.
Lower mortgage rates could help ignite demand and restore a more balanced market. But condos could also act as an anchor that drags overall prices down. Condo prices in metro Denver fell 8.7% annually in August, reflecting strong competition from luxury apartments and more burdensome HOA fees, which are rising due to higher insurance premiums and maintenance costs on older units.
Zillow, the nation’s largest home search portal, still has Denver in the “balanced” camp, but brokerage firm Redfin said the region led the nation in August for the growth in sellers outnumbering buyers.
Redfin estimates that there were 57.1% more sellers than buyers active in the housing market in metro Denver versus a 7.9% gap in favor of sellers a year earlier. That works out to 10,126 buyers active in August compared to 15,905 sellers.
That gap isn’t as lopsided as seen in several Florida and Texas cities. Denver ranks 18th out of the 50 largest metros in terms of how deeply it is in buyer territory. Tobin describes Denver as a “weak” buyer’s market.
Where Denver stands out is in how quickly the shift has happened. Once one of the hottest housing markets in the post-pandemic years, metro Denver is now one of the coldest.
“That 49.2-percentage-point gain is the largest among the 50 most populous metros,” Redfin said in its report.
Las Vegas, Seattle, Nashville and Detroit were some of the other major metros that also moved quickly into the buyer camp this summer.
“We have more homes for sale in Denver than we’ve had in quite a while,” said local Redfin agent Tamara Mattox-Kabat in comments included with the report. “At the same time, there are many first-time buyers who aren’t sure if they can afford to buy and are hoping mortgage rates come down further, but home prices could rise if rates fall further.”
Buyer’s markets tend to have longer sales times, more price reductions and concessions, and flat to falling prices. Unwilling to accept a less favorable bargaining position, more frustrated sellers are pulling their listings off the market. Delistings were up 57% year-over-year nationally in August, according to Realtor.com.
That strategy, however, exposes sellers to the risk of future price declines and even greater competition if more listings pile up.
To obtain a better price, Mattox-Kabat recommends sellers conduct pre-inspections to address health and safety items, hire a housekeeper to tidy the place up, arrange for carpet cleaning, perform paint touch-ups, declutter, and stage the home to make it look as much like a model as possible.
“Buyers like a clean canvas and homes with minimal inspection and maintenance concerns,” she said.