In this November 2022 market update, Colorado realāestate guide Michael Rush reviews Octoberās Denverāarea housing data and recent Federal Reserve actions. He notes the Fedās 75ābasisāpoint rate hike and anticipates a smaller 40ābasisāpoint increase in December, suggesting a possible pause and eventual rate cuts once recessionary demand destruction takes hold. Locally, he reports a modest rise in days on market (from 26 to 28 days), a continued increase in inventory, and a drop in the closeātoālist price ratio to 98.8% from a peak of over 106% in April 2022, indicating a shift toward a more balanced market. Rush explains that seasonal factors and higher mortgage rates have reduced buyer affordability, but warns against waiting for rates to fall because high rates suppress demand and lower prices, while low rates fuel competition and price spikes. He advises buyers who can afford a home to act now and consider refinancing later, and suggests sellerāconcession buydown programs (2ā1 or 3ā2ā1) to reduce initial mortgage costs. The overall message is that the market is not collapsing but is normalizing, and strategic timing and financing options can benefit both buyers and sellers.
Chapters
Hey, our statistics are in for the month of October in the greater Denver area, and we also got an update from the Fed's meeting. They increased the Fed funds rate by 75 basis points, which was expected. And on their December meeting on December 14th, that most likely is going to be an increase of 40 basis points, which will be a good sign. I think it is going to show them kind of pulling back And for the months following that, I think that's going to continue to happen, and they're going to stop increasing that rate, hopefully. And then we're going to see a decrease in rates as well once we're further into the recession, once they fully kill demand and do perform demand destruction, which they're trying to do right now. And once they're successful with that, they will be deeper in the recession, and then the ideal will be getting demand back up, which will result in lower interest rates and more demand. out there from buyers that can afford the home with a lower interest rate. So I will quickly go over a couple of the market statistics for our local market here and then give you a little bit of advice of what I would do if I was a buyer right now or if I was a seller, depending on your situation. So we had an increase of days on market by 2 days from 26 days to 28 days on market. Um, not a drastic increase. This is headed towards more of a balanced increase or more of a balanced market. It's definitely an increase from last year. As far as inventory goes, that is continuing to rise and less sellers are putting their homes on the market because if you have a good real estate agent and somebody that has your back, they're going to be sharing this knowledge with you and giving you, giving you this data so that you can make good real estate decisions. Now we, we saw another decrease in, uh, close-to-list price, so that went down to 98.8%. And to put that in perspective, we were at record numbers, over 106% in April of this year in 2022. So that is coming back down to a normalized market, it's coming back down to reality, and Sellers are definitely doing some price reductions right now, and real estate agents are really having to know what they're doing and price the home correctly if you want to sell right now, which you can still sell if you're in a good area, it's a great location, you know, your home shows well, and there aren't 10 other ones just like it that are on the market. You can still get a great price, but it's going to be a better selling environment for you in the spring selling season. Season. And the reason being is that right now why we have increase in inventory is due to seasonality. And this is cyclical, this happens most years, but we have more right now because the seasonality is coupled with the increase of mortgage rates, right? And that's pushed buyers down, it's pushed buyers out of the market, and the affordability has drastically went down. That being said, a lot of people are saying, oh, I'm going to wait for rates to go down for me to buy, right? But that's like the opposite logic. So when rates are high, then demand is low and prices start to come down. When rates are low and they're at like 3%, right? So when rates are low, Then demand is really high and prices are skyrocketing and going up. So that's what creates the competition. So it's actually the opposite logic. Right now, if you can still afford to buy that house, you should do it, and then you'll refinance that home after 6 payments, whatever it might be, when rates are coming back down in 2023, um, into Q2 2023. So other strategies you can do is a 2-1 buydown, a 3-2-1 buydown, where essentially you ask the seller to provide concessions and pay for you to have a 2% interest rate reduction in the first year and then a 1% reduction in the second year with the idea that you're going to refinance it in that time frame. So anyways, this is Michael Rush. That's kind of my view on the market right now, your Colorado real estate guide. Let me know if you have any questions or you need anything at all. Thank you.
