Summer’s Cooling Real Estate Scene Shifts Market to More Realistic Balance in August
July 2022 showed a summer market that is receiving a “cooling off” condition, but it’s still not enough to push metro Denver’s current seller’s market to a buyer’s market.
Data confirms that metro Denver is no longer in a shifting market. Instead, it has shifted, and the real estate market is more balanced. Month-over-month, the market is down 3.33 percent, but compared to last year, it is still up 11.04 percent, indicating that a more balanced market, combined with slightly decreasing interest rates, may create opportunity for those who previously felt burned out on the process.
One of the primary indicators of a shifted market is the close-price-to-list-price ratio, which was down to 100.81 percent. Buyers have become more specific about what they are looking for and frequently question if, and how much, below the asking price they can offer. Gone are the days that a seller can simply put a sign in the yard and expect their home to sell.
Every indicator points to the market shifting closer to a buyer’s market. The month-end active listings increased 21.53 percent last month. Pending and closed deals decreased and days in the MLS increased by exactly 30 percent. However, the market is still far from what many experts would consider a buyer’s market. There are over 2,000 fewer properties on the market today than there were three years ago, and during the last three years, the amount of standing inventory peaked in June and July, which was abnormal. Historically, the market doesn’t peak until August or September.
Year-to-date, the entire market has seen 7.18 percent fewer homes closed than the previous year. Even with fewer purchases, the market has transacted over $1 billion more in sales volume than the previous year, indicating how high prices have soared from the previous year. This is also indicated in the close-price-to-list-price ratio of 105.33 percent, down from the previous month.
With many people out of town, combined with mortgage rates that briefly went over six percent, the Luxury Market also felt the seasonal cooling in July. New listings were down 22.13 percent, pending sales were down 18.16 percent, and closed homes were down 30.80 percent since June. There were 718 new luxury listings in July and 492 closings.
At the end of the month, there were 1,190 active homes for sale in the metro Denver area over $1 million, signifying that luxury inventory is up. Compared to last year, inventory has increased 39.05 percent, with most of that in detached homes. Notably, the months of inventory increased in July to 2.37 months for detached luxury homes and 3.31 months for attached. This is a leading indicator that the luxury market, particularly attached luxury homes, is no longer an extreme seller’s market as the metro Denver area has seen for the past two years. The luxury market saw the highest number of expired listings, at 183, of any sector in July. This trend toward a balanced market is reinforced by the close-price-to-list-price ratio for July, which was down 3.11 percent from the prior month to 100.44 percent.