WE HAVEN'T SEEN THIS IN YEARS
Colorado’s real estate market is experiencing a shift in buyer’s favor. The high interest rate environment has contributed to a slower market pace, and a significant increase in active listings recently. In many areas along the Front Range, we’re looking at levels of inventory that we haven’t seen in around ten years.
Let’s start with active listings. In the Denver Metro, easily our largest residential market, July saw a 23.6% increase year-over-year - just under 8,000 homes on the market. In Boulder, July saw a 33.3% increase with 849 homes for sale, which we haven’t seen since 2014. In Colorado Springs, July saw a whopping 49.7% increase with 2,739 active listings - the highest levels since 2015. And in Northern Colorado, July saw a 24.1% increase, which we haven’t seen since 2014.
Even in our mountain communities like Eagle County, we saw an 8.6% increase with 441 active listings in July, which we haven’t seen since 2020. It’s worth noting that the real estate markets in the mountains don’t have the exact same seasonal trends that we see along the Front Range. There are significantly less homes overall, and a much higher percentage of vacation homes and rentals. Regardless, the rise in inventory is welcomed.
Now let’s take a look at months supply of inventory, or how many months it would take to sell all current inventory at the current market pace. This metric is historically used as a benchmark when we talk about buyer’s vs. seller’s markets. Typically, a buyer’s market is characterized by six-months supply or higher, while a seller’s market is typically anything under six-months supply. We’ve seen some eye-opening increases lately, especially along the Front Range…
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To make matters even more interesting, mortgage rates have actually started to come down over the last several weeks, currently sitting around 6.5% on a 30-year fixed rate mortgage. This could be one of the best opportunities to buy that we’ve seen in quite some time. We’re looking at a combination of higher inventory and longer days on market, which brings more opportunities to negotiate with sellers, combined with softening mortgage rates, which obviously decrease the costs of owning a home.
But at the same time, we’re expecting a potential rate cut from the Fed in September. If rates do continue to decline, could we see an increase in market activity that diminishes housing inventory and consequently, opportunities for buyers?
It’ll be interesting to see how the next few months shake out for Colorado’s real estate market. But again, there are plenty of opportunities for buyers right now, especially for those who’ve been waiting on the sidelines. Now could be the perfect time to capitalize on lower rates, more housing options, and potential seller concessions. And if rates do continue to decline, refinancing to a lower mortgage rate could be the icing on the cake.