Denver-based Realtor Bret Weinstein took on a client whose house had been on the market for 60 days.
Despite dropping the price to $625,000 from $650,000, it sat for another 45 days with no offers. Another price cut to $600,000 didn’t help either, as it resulted in another 20 days of radio silence.
“We then switched stagers, and the home sold with multiple offers in a day,” he said.
The deal is indicative of how details matter in a market like Denver where home-price growth has slowed dramatically after a surge in post-pandemic migration to the metro area caused valuations to rise sharply in a short period of time.
If homes are priced appropriately and marketed well, buyers will make offers. If not, the listing could sit for months.
“[The buyer] got a deal,” Weinstein said of the $600,000 purchase price. “The staging wasn’t quite right for the home. There’s no such thing as perfection, but you sure as hell have to strive for it on the list side.”
Since the beginning of the COVID-19 pandemic, Denver has been one of the hottest markets in the country having absorbed considerable inbound migration from California, New York, Texas, and Chicago, among other areas. According to data from CoreLogic, Denver’s average price per square foot has risen 35% since 2020.
This gave sellers the upper hand, but the market has turned in recent months. Denver’s population inflow has turned into an outflow, as the metro area has lost residents to places like North Carolina that offer similar cultural values at a cheaper cost of living. John Burns Real Estate Consulting Burns data shows Denver’s net household growth has turned negative by 2.1% year over year.
The loss of population has softened housing demand, as has the rapid rise in mortgage rates that began in the spring of 2022. This has taken power away from sellers, who now face a shortage of potential buyers.
Inventory in the city has also risen sharply, giving buyers more options and more leverage in negotiations. In addition, a sizable amount of the inventory is new construction, and builders are able to offer better financing terms for buyers with their in-house mortgage businesses. This leaves sellers of existing homes having to compete on price with homebuilders.
Altos Research’s Market Action Index exposes how dramatically the dynamic has changed between buyers and sellers over the last couple years. The index considers anything above 30 to be a sellers market, and it currently sits at 38. At the time mortgage rates started rising in 2022, the index in Denver was at 100 — the maximum value of the index.
Realtors on the ground say that even in the last few months the market has shifted more toward buyers, but many buyers are content to wait until interest rates drop, adding to the trouble sellers have. The buyers who are in the market are shopping for the usual reasons.
“The five Ds are still happening — death, diapers, diplomas, diamonds, and divorce,” said Compass-affiliated realtor David DiPetro. “[Buyers] are trying to see what’s happening with interest rates, but that doesn’t affect a seller wanting to sell their house. People still need to upsize or downsize.”
The buyers in the market tend to fit a similar profile. Compass realtor Kelly Moye says both buyers and sellers tend to be people in their early to mid-30s who are experiencing a major life event that requires a new place to live.
“I met people yesterday at an open house that I held in Denver, and all three of them fit the exact same profile,” she said. ”They’ve already owned a home, and they are moving now because they want to be in a relationship. They want to buy with that partner. So they’re people who have a reason to move, not people who are like ‘Oh, it would be nice to have a bigger yard so let’s move.’ Those people are waiting by the sidelines.”
They may not be waiting much longer. The market crash early this week pushed mortgage rates down, and they now sit at 6.74%. Furthermore, the Federal Reserve is expected to cut rates in September, which many agents believe will cause a wave of new demand.
“If [mortgage rates] can get into the 5% range, our buyers who are sitting on the sidelines are going to go crazy,” Moye said.
