Let’s Talk About This Market – Nov ’22
Oh man, there is SO much to talk about! First, I wanted to jump into a quick market check and chat about what is going on in the Denver market and what it means to be a buyer or a seller.
Let’s first chat on the buyer side of things. Yes, rates are up from the historical lows we saw earlier in this market. Let’s be real; 3% interest rates are not the norm. Seeing rates in the 5%-7% range is what we like to see in a more normalized market. When Mark and I purchased our first home, our interest rate was 4.5% in 2017.
So, when we saw rates so low, this drove up the buyer demand, and the sellers couldn’t list their homes fast enough. As rates have gone up, we have seen the market calm down quite a bit. Rightfully so…20% a year appreciation is NOT NORMAL. Anywhere from 3%-5% a year is a normal appreciation gain. What does this mean for buyers? Yes, the sting of 7% is tough, but what’s even worst is the rising cost of rent. As landlords and leasing agents see this shift in buyers, they can charge more for the same rental. Which is worse? That is your internal question.
We are seeing homes sit on the market for longer, which isn’t bad. We are also witnessing homes go for under asking with full inspection clauses and no appraisal gaps. Just a few months ago, we saw $100,000+ appraisal gaps. I would rather pay a 7% interest rate and go $30K under asking than have a 3% interest rate and go $100,000 over asking. I think it comes down to the mindset of the buyers. It’s honestly a GREAT time to buy. And when rates do come down, there will be great opportunities to refi. So get in while the pricing is giving you a break.
Ok, sellers, things will also look different for you. You can no longer throw your home on the market and expect multiple offers. You need to be strategic on pricing and make sure your home shines. There is no room to overprice and have your property sit for weeks and weeks. This also means it’s time to do those home projects you’ve been putting off. Since buyers have more time, they are more critical of the home they see and offer on. If your house isn’t show-ready, you will feel that on the selling side. I would also preface that getting an offer on your property might take a month. Making sure that the expectations are realistic is essential!
While the holidays creep closer and closer, we do expect to see the typical seasonal slowdown during the last few months of the year. Let’s be honest. Nobody wants to sell their house during Thanksgiving or Christmas. But…those who have to, buyers, this is an excellent opportunity for you!