The market appears to have stabilized after a frenzied 3-year cycle.
In the the 2nd quarter of 2022 a number of things happened that affected home sales.
- The Federal Reserve raised the federal funds rate 3 times in a single quarter. While these raises do not directly affect mortgage rates, through interaction of the markets, they eventually filter into other areas of the economy. The primary effect on housing is that many potential buyers hear the new headlines and temporarily pull back on large purchases.
- Mortgage rates increased from sub-4% levels to mid-5% levels in a fairly short time period.
- Inflation continued on an upward trajectory ending up at an 8% rate.
- The war in Ukraine escalated capturing additional negative headlines and raising concerns about what the U.S. role would be and negative affects on supply chains.
- Gas in the Denver area went to $5 per gallon.
As the buyer pool shrunk and more sellers came into the market, inventories of available homes began to increase. The real estate market changed from a world of 100 showings in a weekend with 20 offers on a single property to a more normalized market; a market where there might be 15-20 showings on a properly priced property and 2 or 3 offers presented. Homes that sold in 2 hours to 1 day now can expect an acceptable contract within a week or two.
We expect the current leveling trend to continue through the summer months as buyers will have time to be more selective and will have a little more negotiating power.