The Metro Denver housing market is facing some major headwinds, with home sales falling more than expected and contributing to slower-than-expected price increases. Mid-year update from Denver Metro Real Estate Association..
Despite the worst pandemic of over 100 years, both 2020 and 2021 have been unexpectedly record years for residential real estate activity. Initial forecasts were that 2022 would be down about 4% to 5% from last year’s 63,684 closing. Currently, interest rate declines are approaching 7% to 9% and are expected to fall significantly further depending on the direction of interest rates.
“Given the current volatility, don’t be surprised by the numbers above 9%,” advised Steve Danyliwa, former chairman of the DMAR Market Trends Commission, in a mid-year update of the group.
Similarly, the Commission has lowered its forecast for rising home prices from 11% to 13% this year to 9% to 11%. This is still strong, outpacing the rise seen in most years before the pandemic. but, Annual consumer inflation rate continues to remain at 8.3%The real profit is close to 1% to 3%.
Initial predictions were based on the view that inflation was temporary and that mortgage rates in 30 years would skyrocket from just over 3% to nearly 6%, but not so sharply. The Commission predicts that mortgage rates will be between 6% and 7% by the end of the year.
Economists Nadia Evangelow and Lawrence Yun of the National Association of Real Estate Agents said that a typical Metro Denver buyer could pay $ 2,100 a month at the beginning of the year and buy a home for about $ 540,000. It says it was done. update.
But given the rising interest rates on mortgages, that same buyer can only qualify for a home worth $ 420,000. When it comes to single-family homes, there aren’t many properties on the market in Metro Denver. Sellers expect property competition to intensify and should be prepared to lower prices if there are no serious offers within the first 20-30 days. According to the NAR, the typical decline is about 6%.
Evangelou and Yun said intensifying competition could increase institutional investors, who make up about 15% of purchases in Metro Denver.Even when the bidding war is not so fierce, you may find the first buyer to stand still. We are confronting increasingly well-funded investors..
Danyliw said 2022 was the story of two halves, and the more solid halves were just over. The optimistic scenario is that the market will move to a “healthier and more balanced” state, steadily rise, more lists for buyers to choose from, and fewer offers that exceed the asking price.