November 26, 2024

Where We Are Now

As we move into the year’s end, Denver’s real estate market is navigating its expected seasonal slowdown. Days on market are climbing, seller concessions are increasing, and price reductions are becoming more common. While these might seem like negatives, they’re simply part of the typical real estate rhythm.

However, this year stands out for a different reason—buyers are staying engaged. Despite interest rates at their highest levels since July, post-election buyer activity displays resilience with volume of home showings 90% higher than the last two years. This highlights pent-up demand that is likely to translate into a strong spring market in 2025.

---

Interest Rates: A Complex but Manageable Factor

Mortgage rates have risen significantly over the last 2 months after hitting a 2 year low in September. But the question remains, will rates come back down as we’ve anticipated?  

The new variable is the incoming administration representing a shift in economic policy. So far, the potential for these new policies has driven a spike in market enthusiasm and caused interest rates to rise further. If this enthusiasm is maintained, interest rates may remain higher for longer.  

But, the larger economic landscape of a weak jobs market, rising tariffs and concerning manufacturing reports coupled with historic household debt suggest that market enthusiasm may wane and mortgage rates will ease into 2025.  

---

Seasonal Trends we are Watching

Here’s what the data reveals about the current market and what homeowners can expect in the coming months:

• Days on Market: Properties are staying on the market longer, averaging 57 days—up from last year but consistent with seasonal patterns. Larger homes, particularly those over 3,000 square feet, are averaging over 80 days on market. These extended timelines reflect typical holiday behavior and days on market will get longer before the year ends.

• Seller Concessions: Concessions are on the rise, with the average buyer negotiating over $7,000 per transaction and likely ending the year over $8,000. This trend indicates an ongoing negotiation advantage for buyers given the lower buyer demand relative to higher inventory this time of year. Most buyers are using seller concessions to buy down interest rates and pay for closing costs.

• Inventory: The number of homes available for sale is declining as buyer activity remains stable, yet fewer homes come to market and more homes are removed from the market during the holidays.

---

Looking Ahead: Spring 2025 Will Be Competitive

If current trends hold, Denver’s real estate market is poised for a dynamic spring. Buyer activity typically accelerates around mid-January, while seller activity doesn’t ramp up until mid-March. 

While sellers may feel the seasonal market slowing down now, in just 45 days buyer activity will jump and sellers will begin to once again experience declining days on market and more aggressive offers from buyers.  

After the first of the year, buyers are likely to face a faster-paced market with more competition and rising prices. While inconvenient through the holidays, buyers who are committed to buying in the next 6 months may consider accelerating their timeline to capitalize on today’s lower prices and reduced competition that allows them to negotiate more favorable terms. Buyers would do well to remember that sellers who are on the market now, really want to sell.