Denver-based real estate agent Bret Weinstein took on a client whose home had been on the market for 60 days.
Despite lowering the price from $650,000 to $625,000, it remained bid-free for another 45 days. A further price reduction to $600,000 did not help either, as it resulted in another 20 days of radio silence.
“Then we changed home stagers and the house sold in one day despite several offers,” he said.
The deal is a sign of how important details are in a market like Denver, where home price growth has slowed dramatically after a surge in immigration to the metropolitan area following the pandemic caused valuations to rise sharply in a short period of time.
If a home is priced properly and marketed well, buyers will make offers. Otherwise, the offer may sit untouched for months.
“(The buyer) got a bargain,” Weinstein said of the $600,000 purchase price. “The staging wasn’t quite right for the house. There’s no such thing as perfection, but you damn well have to strive for it when it comes to the listing.”
Since the COVID-19 pandemic began, Denver has been one of the hottest markets in the country, welcoming significant immigration flows from California, New York, Texas and Chicago, to name a few. According to CoreLogic, The average price per square foot in Denver has increased 35% since 2020.
This gave sellers the upper hand, but in recent months the market has turned. The population influx to Denver has turned into an outflow as the metro area has lost residents to places like North Carolina that offer similar cultural values at a lower cost of living. John Burns Real Estate Consultancy Burns Data shows that Denver’s net household growth turned negative by 2.1% compared to last year.
The population decline has dampened demand for housing, as has the rapid rise in mortgage rates that began in spring 2022. This has taken power away from sellers, who now face a shortage of potential buyers.
Supply in the city has also increased significantly, giving buyers more options and room to negotiate. In addition, a significant portion of the supply is new construction, and builders can offer buyers better financing terms with their own mortgage deals. This means that sellers of existing homes have to compete with builders on price.
Altos Research The Market Action Index shows how dramatically the dynamic between buyers and sellers has changed in recent years. The index considers anything above 30 to be a seller’s market and is currently at 38. When mortgage rates began to rise in 2022, the index in Denver was at 100 – the index’s highest point.
Local real estate agents say the market itself has shifted more toward buyers in recent months, but many buyers prefer to wait until interest rates fall, adding to sellers’ problems. The buyers who are in the market are looking for properties for the usual reasons.
“The five Ds are still there – death, diapers, diplomas, diamonds and divorce,” said Compass-affiliated real estate agent David DiPetro. “(Buyers) are trying to see what’s happening with interest rates, but that doesn’t affect a seller who wants to sell their home. People still have to go bigger or downsize.”
Buyers in the market tend to have a similar profile. Compass broker Kelly Moye says both buyers and sellers are typically people in their early to mid-thirties who are experiencing a life-changing event that requires a new home.
“I met people yesterday at an open house I hosted in Denver, and all three of them fit the exact same profile,” she said. “They’ve owned a home before, and they’re moving now because they want to be in a relationship. They want to buy with that partner. So these are people who have a reason to move, not people who say, ‘Oh, it would be nice to have a bigger yard, so let’s move.’ Those people are on the sidelines.”
You may not have to wait much longer. The stock market crash earlier this week has pushed mortgage rates down, and they are now at 6.74%. In addition, the Federal Reserve is expected to cut rates in September, which many brokers believe will create a wave of new demand.
“If (mortgage rates) go into the 5 percent range, our buyers who are currently undecided will go crazy,” Moye said.
