May Market Trends Report Brings Price Reductions and Lower Average Sale Price
Colorado REALTORS® noticed a new turn in CAR’s Market Trends: “I think we hit a peak in late March or early April,” said Aurora REALTOR® and CAR Spokesperson Sunny Banka, who is getting about 25 emails a day about home price reductions. “What I’m paying attention to is how drastically the average price has changed,” said Denver REALTOR® and CAR Spokesperson Matt Leprino. “When we suddenly see average prices, which had gone up $100,000 a month in Denver, drop off, it means the really expensive homes have hit the wall,” said Leprino. “On a $3 million property, when you have huge interest rate shifts, we’re talking really big-buck changes between payments.”
He says these changes are not any kind of reaction to inflation or the possibility of a recession. “Everybody thinks if you have a boom then you have to have a crash,” Leprino said. “We still have such a profound lack of inventory that it will be a long time before we see anything going really south. Prices, though still up, are less-up and those in the mega or average (home-size) category may very well have decided to take a step back.” Leprino added: “(We will) see what those in the median range, the bungalow-buyers, decide to do next.”
Douglas County REALTOR® and CAR Spokesperson Cooper Thayer agrees. “A slight decline in median sales prices is the first sign of a leveling-off in the track. With consumer confidence in the economy decreasing and high mortgage rates pricing out many prospective buyers in the Denver-metro area.”
“…fears of continued inflation have put many buyers on pause,” said Fort Collins REALTOR® and CAR Spokesperson Chris Hardy. “Buying a home at an already escalated price is just that much farther out of reach. More homes are coming on the market as evidenced by the 2.5% bump from last May but it’s a mixed bowl of nuts.” He explained that well-maintained and updated homes will sell before homes with more wear and tear.
“Make no mistake, the market has not shifted to a buyer’s market and there is not a bubble that burst,” said Boulder/Broomfield-area REALTOR® and CAR Spokesperson Kelly Moye. “The interest rate hike did exactly what it was designed to do — cool a frenzied market that needed a correction. Our real estate market is still steady, appreciating, and healthy. It’s just moved from red-hot to a warm, orange glow.”