The Colorado Front Range real estate landscape is finishing a year that was anything but dull. While the seasonal slowdown brought familiar patterns—rising days on market, increasing seller concessions, and more price reductions—there’s a deeper story under the surface. This year showcased the power of interest rates driving seller motivation and buyer sentiment.
- Last week, the typically more volatile average sales price relaxed from the previous week, at $686,783. This is way higher than the year-end averages over the last couple of years.
- The median sales price last week also relaxed, to $574,490. Also higher than the last couple of years.
- While 2024 ends with the expected seasonal slide of home sold values, prices across the Front Range were up approximately 4% year over year.?
Available Inventory of Homes
- On the one hand, we have the highest inventory levels in over a decade at just under 7,250 homes, far surpassing the historically tight conditions of 2020–2022.
- On the other hand, buyer activity last week—measured in showings—also remained seasonally elevated at 16,785.
- However, it is still taking around 30 showings for a property to go under contract.
- Demonstrating that while buyers may have been hesitant, they didn’t walk away from the homebuying process.
- As the year ends, the average days on market climbed towards 65 days before getting under contract. Expect this to improve by 20-25% as the new year begins.
Price Reductions & Seller Concessions
- As we come to the end of December, over 50% of properties have undergone at least one price reduction, and over 75% are selling below their original asking price.
- Seller concessions have remained a significant negotiation tool.
- While this may feel like bad news to some sellers, these conditions are seasonally expected and will take a radical turn heading into the new year.?
Interest Rates as the Tipping Point
- Mortgage interest rates hit a two-decade high just over a year ago before bouncing around for the next 12 months of 2024, at one point hitting a two-year low in September of this year.??
- Even a modest half-point drop triggered notable buyer engagement, suggesting that many prospective buyers hovered at an emotional “tipping point,” ready to act if financing improved.
- Rates mostly in 2024 remained in the 6% range, venturing to the low 5%’s on certain types of loans for well-qualified borrowers.?
- Our state’s economic diversity, steady population dynamics, and an influx of wealthier out-of-state buyers are ingredients for Colorado and the Front Range to remain one of the most stable and attractive housing markets in the nation.
- While national housing policy, Federal Reserve moves, and ongoing global uncertainties will shape the broader economic and mortgage environment, local fundamentals remain strong.
- As interest rates show signs of modest decline into later 2025, more homeowners—who have been locked in with super-low interest rates—are likely to enter the market, increasing listing volume.
- At the same time, any meaningful rate reduction will spur sidelined buyers into action, setting the stage for tremendous market activity.
- Analysis of the fundamentals suggests an overall?5–7% appreciation rate?over 2025.
- Should mortgage interest rates push even lower, say into the 5s, we could see a significant uptick in buyer activity.
- In this scenario, properties will move faster, with fewer price reductions, lighter concessions, and possibly multiple-offer conditions reemerging.? Prices could then rise substantially beyond the anticipated 5–7%.
