According to the Denver Metro Association of Realtors’ (DMAR) August market report, residential inventory rose 2.78% in July over June and 3.96% over July of last year. While the Denver Post reports that inventory is still less than half of the historical average, it’s the largest supply of homes on the market in July in three years.
Despite the availability of more homes, though, the number of sales dropped substantially (15.65%) from June, as well as from July of 2017 (8.54%). Meanwhile, average prices decreased somewhat, dropping 1.93% to $479,802 from June to July. The median price dropped .60%, to $417,500.
Although the housing market traditionally slows this time of year, DMAR Market Trends Committee Chairman Steve Danyliw believes the numbers may represent a larger trend.
“It’s not time to panic, but this market is showing signs of cooling, and Realtors need to manage seller’s expectations as market conditions change,” notes Danyliw in the monthly report. “…With inventory at a three-year high, the climate is perfect for slowing activity and price reductions as fewer and fewer homes are considered affordable.”
Indeed, unaffordability may be one of the causes of the slowdown. Interest rates on a 30-year mortgage were 3.9% a year ago, notes a recent Denver Post article. “They now run closer to 4.6% and are rising, knocking more buyers out of the running.”
Additionally, Zillow’s senior economist Aaron Terrazas, cited in the DMAR report, notes that rent growth in the metro area has mostly stabilized, reducing the urgency for renters to escape rising rents by buying a home. This has further lowered demand.
In all, the report is a boon to buyers and perhaps a wake-up call to sellers, who are used to sitting in the catbird seat when it comes to realizing exceedingly high appreciation on their homes.
“Can a cooling market be considered positive?” asks Danyliw. “To most sellers, no, but honestly, they have experienced unprecedented equity growth over the past several years. It’s time to share the love and keep home buying an option in the Denver metro area. “