LABOR DAY MEANS INVENTORY HAS PEAKED - AND SO HAS BUYER DEMAND - FOR 2024

There's a predictable rhythm to the Denver housing market each year, at least as it relates to inventory.  We start the year with very little for sale... buyers show up early and it's generally very competitive until around Memorial Day... the market then slows and inventory climbs through August, with the number of active listings traditionally peaking around Labor Day... before both buyers and sellers go into hibernation during the fourth quarter.

As we head into Labor Day weekend, we've got 10,068 active listings for sale in the Denver MLS, up from 6,812 homes for sale one year ago at this time.

That's about 48% more listings on the market year-over-year.

Last year, there were 4,021 homes under contract on Labor Day weekend.  This year, is 4,035 pending contracts.

So essentially the same number of pendings, but 48% more listings.  Not a great environment for sellers.

There are currently 2.50 active listings to each home under contract in the Denver MLS.  The last time we had a higher rate of actives-to-pendings was October of 2011... a full 13 years ago.

In fact, from January 2012 until July of 2024, the Denver housing market went 151 consecutive months where there were fewer than 2.00 active listings to each home under contract.  

What does this mean?

For sellers, it means you have competition from other listings and less demand than we have seen in at least 13 years, thanks to high prices, higher rates, election fear and the new buyer-agency rules that went into effect August 17.

The rest of this year is poised to be a slog - and that's putting it nicely.

If you're looking to sell... my very strong advice would be to wait (at least) until January... when rates will likely be 50 - 75 basis points lower, election drama will (hopefully) be behind us and both buyers and sellers will be somewhat more acclimated to the dramatic rewrite of agency rules.

If you're looking to buy... there might be some real opportunity over the next four months... if only because you'll have more leverage than at any time since the Great Recession and most sellers will have no qualm paying your agent the commission (which now defaults to the buyer's obligation under the new rules).  

I do believe, with increasing conviction, that we're going to see a much stronger market to start 2025, with pent-up demand and lower rates leading to a very competitive Q1 - Q2 environment.

These buyers and their desires for home ownership haven't gone away... that demand is simply being deferred.

If I'm selling... I'm waiting for these buyers to return.  But if you're buying, there's a serious conversation to be had about jumping in before multiple offers and bidding wars are once again the norm in the Denver housing market.  

AND SO IT BEGINS...

It's been almost a full year since a jury seated in a Kansas City courtroom rocked the real estate world with a verdict in a case known as "Sitzer Burnett".

After months of legal wrangling and massive financial settlements, the real estate landscape is about to change forever in just a few short weeks.  

Here's what you need to know...

WHAT THE JURY DECIDED:  Rightly or wrongly, the jury determined that requiring sellers to pay real estate commissions as a condition for having their property marketed in the MLS was a violation of the Sherman Antitrust Act.

WHAT'S CHANGING FOR SELLERS:  Despite the massive $1.8 billion verdict, for most sellers not much will change.  Offering compensation to buyer agents will now be optional (not mandatory)... but in reality, I expect 90% or more of sellers will still see the value in compensating cooperating brokers.

WHAT'S CHANGING FOR BUYERS:  For buyers, a lot is going to change.  As a result of this verdict, buyers will now assume legal responsibility for compensating their agents.  And before viewing ANY properties, it will be a mandatory requirement that buyers have a signed, valid agency agreement in place with a buyer's agent.  If a buyer finds a place that checks all the boxes, the hope is the seller will agree to compensate the buyer's agent.  If not, it's either "no deal" or the buyer will have to pay their agent directly, per their pre-negotiated agency agreement.

WHAT'S CHANGING FOR AGENTS:  Listing agents will have to have deeper conversations with sellers about whether to offer compensation to buyer agents, and if so, how much.  But the most uncomfortable aspect of this settlement is that many buyer agents will be forced to seek agency agreements, with pre-negotiated compensation terms, BEFORE touring any homes.  There is potential for high pressure sales tactics from some agents intent on obtaining a signed agency agreement based on a 30 minute introductory meeting at Starbucks... as well as the potential for some buyers to try and "go it alone" in one of the most complex and important financial transactions.  The potential for massive future litigation - think breach of contract, breach of fiduciary duties, conflict of interest, failure to disclose material defects, etc - will keep real estate attorneys busy for years to come. 

Pending any last minute injunctions or renegotiated terms... the new rules take effect August 17.

I've written extensively about this verdict and its potential impacts throughout the year in several reports I have shared with past and current clients.  I believe these new rules are likely to shrink the buyer pool in the short term and lead to greater liability for agents, brokerages and consumers, particularly buyers.  If you have specific questions, please reach out to me directly and I will be happy to chat with you further about how to navigate these monumental changes.