2023 In Review
Over the course of early January 2024 our team has been delving into the year-over-year (YoY) statistics for our local market of Northern Colorado from the Denver Metro to Fort Collins areas along the I-25 Corridor. A predominant trend in 2023 has been the decline in sales compared to recent years, coupled with lower inventory. Nationwide, according to NAR, both listings and sales hit 20-year lows. However, unlike the forced credit sales in 2008, today’s homeowners, benefiting from high equity positions and the option of trading their low mortgage percent in for one at double or triple the rate, opted to stay put, resulting in fewer listings.
For those who did move, they experienced a silver lining. Despite facing higher interest rates for the next few years, they did not pay a premium for their homes compared to 2022. For the first time in a decade, prices did not see a year-over-year surge. There are only a handful of instances of an average or median YoY price increase exceeding 3.9%.
Let’s take a closer look at some of the prominent trends that emerged and shaped the real estate market in Northern Colorado over the past calendar year, and how they will in turn shape the months ahead.
Northern Colorado & Denver Metro Home Sales
In the Denver Metro area for all of 2023, there were 41,840 sales, the fewest number since 2011, when housing markets were shaking off the hangover of a housing bubble and elevated foreclosures. This is about a 20% decrease since last year.
In Northern Colorado (Erie on Up North through Fort Collins) for all of 2023 had 11,068 sales. This is about a 15% decrease from ’22.
Northern Colorado & Denver Metro Median Price
Denver Metro Area - $565k about a 1.8% increase from 2022
Northern Colorado Area - $545k about a 2% decrease from 2022
(Don’t freak out though, It’s a minuscule $11,862. Our educated guess is that buyers tend to favor urban over suburban areas in times of financial uncertainty, so the decline here dragged down the region a touch.)
Our Predictions for 2024
Our prediction for 2024 is we’ll see an a mild uptick in home sales & price across the board as announcements of the Fed’s planned rates cut have started to get into the ears of all the home buyers with pent up demand that were priced out of the market through the second half of 2023 as we saw mortgage interest rates up to 8%. Now, let’s factoring in the massive appreciation we’ve had the last couple years, housing inventory levels still historically low, and a lack in median household income. This will suppress the amount of qualified buyers for homes and prevent another appreciation spike.
That said, some top analysts agree if we see interest rates enter the low-mid 5’s the market will experience a tipping point in which we may see a few months during the end of the year that resembles the 2022 market of multiple offers and Days on Markets dropping drastically. Time will tell what we will experience. There has currently been an uptick in multiple offers bidding over asking price by a few percentage points on homes already in both markets for home priced correctly (in line with the market price trends for the neighborhood, normally priced 1-2 % below competition, and often marketed aggressively in coming soon marketing). Unlike some of their competition these homes manage to go under contract within 3 days-2 weeks on average.
Denver Metro Area Sales and Median Price Prediction - We’ll see an approx. increase of 10% in home sales and will end with around 46,000 home sales & a median price increase of 4% ending the year around $585k-$590k.
Northern Colorado Area Sales and Median Price Prediction - We’ll see a more modest approx. increase of 8% in home sales and will end with around 12,000 home sales & a median price increase of 1% ending the year around $550k.
Interest Rates & Job Markets & Inflation
The upcoming Fed meeting on January 30th and 31st has tongues wagging about a potential rate cut. While 2024 holds promise for rate adjustments, the likelihood of an imminent decision is fading.
This is due to The Labor Department’s recent data drop revealed a noteworthy dip in US weekly jobless claims – down by 16,000 to a mere 187,000, marking the lowest since September 2022. The resilience in the labor market is a key factor the Fed weighs in crafting new monetary policies. A robust job market signals a thriving US economy, indicating the ongoing struggle against inflation.
What does this mean for your financial landscape? Economists are now leaning towards the Fed maintaining current rates at the upcoming meeting, aligning with the solid employment figures.
Impact on Mortgage Rates: The robust unemployment data played a role in a slight uptick in mortgage interest rates these last couple weeks. We ought to brace for potential rate fluctuations as we await more economic insights leading up to the pivotal Fed gathering.
For a look at Mortgage Rate Trends CLICK HERE
Some Friendly Advice
For Buyers: We encourage you to avoid the trap of trying to “time the market” since this is virtually impossible to do reliably. Our suggestion is to have “time IN the market”. As soon as you’re mentally ready, get a pre-approval through a local mortgage lender/broker (these are easily updated without additional hard dings to your credit by sending in a couple updated documents to your mortgage expert every 1-2 months), and work with a proactive agent who not only helps you see the opportunities for deals On-market, Resale, and New Build Construction, but also will actively search for off-market homes, pocket listings, and keep you apprised on local market fluctuation in the market you’re shopping. This way you’re able to hop on the first great opportunity that suits your needs and capitalize on the solid appreciation our area holds to build more wealth.
We’ve seen more new home building permits and have seen some of the best deals for home buyers in New Build Communities in 2023 for their generous lending programs and competitive pricing which surprisingly came down in line with the resale market homes of comparable sq ft, beds/baths, and location. Keep in mind your real estate agent can still help you with these homes. If you’d like to save the cost of paying for your representation against New Builder Companies, be sure to inform them on the first meeting of your agent and provide the agents contact information who will assist you in the process with negotiations, coordination of inspections and appraisals, and work with your home builder to fix problems that can and do arise through the process. They will be able to compensate your agent to help you get a great deal! Just like with a resale home! Win-Win
For a look at some of the Newest Listing Hitting the Market CLICK HERE
For Sellers: It’s important to be realistic and strategic with pricing. It is still a seller’s market, but think of home sellers as bigger heavy weight fighter going up against home buyers the middle weight fighter who’s faster and quicker to adapt. Having the “upper hand” doesn’t guaranty you a favorable home sale against the savvy home buyers in today’s market. If you’d like to “Win” you’ll have to go in with a strategy to dominate the other listings in marketing and pricing. Go for the “Knock out punch” early on. You don’t want to be dancing around with these home buyer’s for long. Your goal is multiple offers, this will allow you to pick between them based on not only Price, but Terms, Dates, Contingencies, and Inclusions/Exclusions.
Curious on the value of your house? CLICK HERE for an immediate rough home value estimate & a professional analysis free of charge!
We’re here to give you confidence during your real estate journey in Selling, Buying, and Investing in Real Estate in our expert market and across the WORLD through our extensive KW referral network. Give us a call if you have any questions. Best of Luck in 2024!