If you have followed the Front Range real estate market for any period of time, you know that buyers tend to show up early in the year and inventory tends to rise as we get closer to the end of the school year. This year, pendings have been almost even with 2024 but active inventory is rising... significantly.
I've always educated my clients that the optimum time for listing a home in the Denver metro area is from mid-January until about mid-May. This is based on years of following absorption rate trends - in short, the absorption rate is a calculation that determines how many weeks (or months) it would take to sell a home based on the current pace of sales.
In 2024, for example, our lowest absorption rate occurred in April with 1.54 months of inventory (MOI)... and our highest absorption rate was in November, with 3.17 MOI. Hence, best for sellers in the spring, and best for buyers in the fall.
In 2022, our lowest absorption rate was in February with 0.32 MOI and our highest absorption rate was again in November, at 2.45 MOI. Again, a far better selling environment in the spring than in the fall.
If you're selling, you obviously want the greatest leverage versus buyers, which is reflected by a low absorption rate. Conversely, if you're buying, your maximum leverage is when there are more sellers than buyers, which is reflected by an elevated absorption rate.
As of March 31, our market currently has 2.42 MOI, which is significantly higher than this time in recent years. If fact, if you look at the absorption rate in March over the past six years, we had 1.43 MOI in 2019... 1.23 MOI in 2020... 0.41 MOI in 2021 (3% mortgages)... 0.43 MOI in 2022 (4% mortgages)... 1.14 MOI in 2023 (6% mortgages)... and 1.66 MOI in 2024 (closer to 7% mortgages).
This means at the current pace of sales, it would take almost 2.5 months to sell all of the homes currently on the market. In my view, anything over 3.0 months constitutes a buyer's market.
There are currently about 8,400 active listings on the market. This is up 51% from the same time in 2024... up 106% from 2023... and up 383% from the unhinged crazy spring market of 2022.
What does it all mean? Based on historical trends, 8,400 active listings in March could put us on track for 13,000 - 14,000 active listings by Labor Day, which would be the highest inventory count since 2011. If demand remained just equal to 2024, that would equate to ell over 4.0 months of inventory.
The bottom line is that sales are still happening, but buyers have more choices... lots more choices. To be successful in this environment, sellers needs to have a tangible value proposition... which means it either needs to shine like nothing else on the block ot be priced ultra-competitively vs recent comps.
In a related state, 35% of all homes that have gone under contract in the MLS this year have come back on the market at least once. By comparison, in spring of 2022 this figure was 5%. In other words, in 2022 (with 3% mortgages) 19 out of 20 homes that went under contract closed with that first buyer. Today's it's more like two out of three. Yikes.
The only way to combat this is to pay extreme attention to every aspect of the home selling process. From pre-market prepwork to excellent staging to professional photography to well-promoted open houses to engagement with each and every agent who shows your listing... in this market, everything truly does matter.
The market of 2025 has been much more segmented than in previous years. There are most definitely hot pockets and cold pockets. Three of my six listings this year have attracted multiple offers. Location is a huge factor. But so is condition and pricing. As I've said repeatedly for the past two years, if you're selling a home, your motivation needs to be an 8, 9 or 10... not a 5, 6 or 7.
When will things turn around? The frustrating answer is that no one knows. But demand repressed is not demand destroyed. There are thousands of aspiring buyers on the sidelines, waiting for rates (or prices) to come down so that home ownership - the Great American Dream - is attainable once again.