Michael RushReal Estate Broker, Keller Williams Realty DTC · Real Estate Broker at Keller Williams Realty DTC

October 2023 Colorado Market Update 🏘️

6 Oct 2023 · 3 min

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3:13

In this October 2023 market update, Colorado real estate guide Michael Rush presents a detailed snapshot of the greater Denver housing market, noting a 4.6% year‑over‑year increase in single‑family home prices to $777,000, a 1.8% decline in townhome/condo prices to $472,000, and significant drops in new listings (‑12.9%) and active inventory (‑23.1%). He also reports declines in pending sales (‑7.4%), a slight rise in the closed‑price‑to‑list ratio to 99.2%, and an 11.5% increase in days on market to 29 days. Rush then shifts to macro‑economic analysis, explaining the historical significance of the 10‑year Treasury yield crossing above the Fed funds rate—a situation that has occurred only five times in the past 40 years. He argues that this inversion signals that the Fed will “pump the brakes” and cut rates, a pattern that historically leads to steep declines in mortgage rates after a lag. Citing past cycles (e.g., rates falling from 11% to 7.5%), he notes the current 3% spread is the largest yet, suggesting imminent mortgage‑rate reductions but also warning of a likely recession in the coming year. The video concludes with a call to action for viewers needing real‑estate assistance.

Chapters

Hey everybody, this is Mike Rush, your Colorado real estate guide, bringing you a market update for the greater Denver area. Single-family home prices increased 4.6% year over year to $777,000. Townhome and condo prices decreased 1.8% to 472,000. New listings dropped 12.9% to 4,337. Active listings are down 23.1% year over year to 7,094, and that's mainly due to decreased demand and not because of new listings coming onto the market. Pending sales are down 7.4% year over year to 3,154. Closed price to list price increased by 0.3% to 99.2%, and days on market increased to 29 days, which is up 11.5% year over year. Now, we thought interest rates were going to go down a little earlier in the year around May or June, and they didn't. There's several reasons for that: the banking crisis, the increase of the debt ceiling over $270 billion. There are other reasons as well, but I want to take a look at the relationship between the 10-year Treasury yield and the Fed funds rate so that we can see what's coming next. So what we're experiencing here has only happened 5 times in the past 40 years. Now, when the 10-year Treasury, which is the blue line, when that is above the Fed funds rate, that is a good thing because you want to have— when you place your money somewhere for 10 years, you want to have that positive return on your investment. Now, when that Fed funds rate crosses that line and goes above the 10-year Treasury yield, the Fed knows that they've messed up. They know that they need to pump the brakes. We've seen that happen 4 other times in the past 40 years, and we're seeing it now. And as you can see, every time that it happens, they pump the brakes, they stop immediately and start decreasing that Fed funds rate. And that's what we're seeing now. The only difference is is that there's an even larger spread right now than there was before. Now you might be asking, what is that relationship with mortgage interest rates? Now every time that they pump the brakes and they decrease that Fed funds rate, we see a steep decline in the mortgage interest rates as well, and they follow with a little bit of a lag period. In the first instance, those interest rates went from 11% to 7.5%. In the second interest, it went from 8.5% to 5.5%. In the third, 7% to 4.5%. In the fourth, 3.5% to 2.5%. And now here, here we are with the biggest spread that we've had so far. The Fed has really messed up this time. We are— we have a 3% spread. So I think this means that interest rates come down, and I think that we're headed into a recession next year. As always, I'm Michael Rush, your Colorado real estate guide. I'm here to help you with any of your real estate needs, so just reach out if you have any questions. Have a great day.