By Jenny Apel
As a result of the Federal Reserve’s attempts to curb inflation in a post-pandemic era, high average mortgage rates in 2023 took a big toll on real estate sales nationwide. Northwest Denver was no exception, although home values have remained steady.
- There were only 1,508 new listings brought to market in NW Denver in 2023, down from 1,708 in 2022, representing the lowest number in at least the last 10 years.
- Low inventory kept average sales prices relatively stable with the average closed price for all types of residential property in NW Denver falling only slightly year-over-year by 1.7% to $889,570. Although down from last year, this number still represents the second-highest average sales price in NW Denver history.
- Closings in NW Denver hit the lowest level in at least the last 10 years with a mere 1,074 transactions, down 27.2% from 2022, representing less than $1 billion in closed volume, which is 28.5% down from last year, a number not witnessed here since 2016.
- Listings in NW Denver contracted in 2023 in an average of 28 days, up sharply from 16 days in 2022, but still the third-lowest average in at least the last 10 years.
- NW Denver sellers in 2023 received an average of 98.5% of their original ask price, tying 2019 for the lowest average in at least the last 10 years. Sellers did receive on average 100% of their final ask price, down only .1% from 2022.
- NW Denver ended 2023 with 2.4 months of available inventory, meaning that if no new inventory came to market, based upon the current rate of closings, the market would be sold out in nearly two-and-a-half months, or about 72 days. Three to four months of inventory is considered a “balanced market” these days, and so the market is still leaning somewhat toward the seller. Compare this to two months of inventory (60 days’ worth) at the end of 2022.
2024 Outlook
In a report dated Dec. 13, 2023, Lawrence Yun, chief economist with the National Association of Realtors (NAR), predicted that nationwide, rates will fall, incomes will rise and home prices will reach an all-time high in 2024.
Yun forecasted that the U.S. GDP will grow by 1.5%, avoiding a recession, with net new job additions slowing to 1.7 million in 2024, compared to 2.7 million in 2023 and 4.8 million in 2022. Yun also noted that he expects the 30-year fixed mortgage rate to average 6.3% after eclipsing 8% in late 2023, and that the Fed will cut short-term rates four times – calming inflationary conditions – in response to slower economic activity.
In a Nov. 29 article, Realtor.com’s 2024 National Housing Forecast predicted that Denver median home prices will drop an average of 5.1% in 2024 and that home prices nationally will drop by 1.7%. It’s interesting that their forecast is in stark contrast to the National Association of Realtors’ forecast. Which is right?
Know that for home prices to drop by 5.1% or even 1.7% in Denver would necessitate a flood of new inventory to hit the market, coupled with a completely apathetic buyer pool, to consistently have the required three to four months of available inventory on hand for such a deflation. Denver has not witnessed inventory levels above three months consistently at any time over the last 10 years, and conditions would have to change drastically for it to happen now.
Given my own personal level of activity that started the day after Christmas, I know that lower rates are already having a profound impact, and I’m siding with Yun and the NAR on this subject. It’s going to be a great year for Denver real estate!
Data provided by Metrolist.
Jenny Apel is the senior broker associate and group leader at Nostalgic Homes Group / Compass. She can be reached at jenny@nostalgichomes.com.
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