A year ago at this time, mortgage rates were 8% and the Denver housing market was the slowest I had seen it in the 17 years I had been in Colorado. I closed one year-end deal and things were so grim it felt like there might not be another closing, ever.
A few weeks later, in late January, I listed a value-priced estate sale home in Centennial that attracted 70 showings and 17 offers, selling $35,000 over list... followed by a Mid-Century Modern home in a desirable part of Wheat Ridge that drew five offers and sold $40,000 over list.
What the heck happened? (And will it happen again?)
Each January, inventory begins the year at its lowest point. At the start of 2024, there were about 4,500 active listings on the market. Today, there are nearly 10,000.
In January of 2023, there were 4,000 homes on the market. By November, there were 7,000 active listings.
In January of 2022 (the most extreme example), there were just 1,100 active listings on the market. By August, there were 7,000.
Reality is that buyers historically show up early in the year, but the listings don't really start to hit until May - near the end of the school year. That window from mid-January through mid-May is what we call the "spring market" (even though it's more winter than spring). And it's during that window that properties sell most quickly, multiple offers are most common, and the majority of appreciation for the year occurs.
We have serious affordability issues that have shrunk transaction counts by 40% since the pre-pandemic era. But reality is, we've also had two full years of people wanting to buy sitting on the sidelines. The repressed demand is still a real thing, and despite my many attempts to implore more buyers to be aggressive in Q4, when listings are plentiful and demand is lowest... a mysterious malaise seems to get the best of people who just shut it down for the holidays.
Come January, we'll see a predictable surge of buyers rolling back into the market, even with rates at 7%. Sellers who are wise will list early and have a much better experience than those who listed in Q3 or Q4, when apathy suppressed motivation.
It won't be easy - nothing is easy anymore. But homes will sell more quickly with less drama and buyers will forego some of the leverage that was theirs for the taking during the second half of 2024.
Q1 and Q2 are for sellers, Q3 and Q4 are for buyers. It's the rhythm of the Denver housing market and in just a few short weeks, the pendulum which has been so tilted in favor of buyers will swing back in the other direction.
