We’re seeing large numbers of price reductions in our market right now. Sellers are reducing their asking prices left and right.
Many sellers won’t want to hear why this is happening, but we aren’t in business to tell people what they want to hear. We prefer to deal with facts.
In Denver, 47% of the homes for sale have been reduced in price. In Highlands Ranch, 42% of homes for sale have been reduced in price. In Arvada it’s 49% and in Centennial it’s 40%. In Golden 45% of homes on the market today have been reduced in price. In Westminster, sellers have reduced the asking price of 55% of the homes for sale.
In more typical times, about 13% of homes nationally are reduced in price at least once before they sell, so these numbers are high.
But why is this happening?
Let’s look at what it took to purchase the median-priced home three years ago and compare it to what it takes to buy that same home today.
In September 2020, a home’s median sale price was $464,000. A typical interest rate that month was 3.03%.
Today, the typical interest rate rose to its highest level in decades. The national average is 7.65%. We are still determining the median price for a home sold in September, but it was $582,000 last month.
We can get some crucial insights by examining how monthly payments have changed on the median home in just three years.
Assuming the same property taxes, insurance, and mortgage insurance for each buyer, the monthly payments on a median-priced home went from $2,399 in September 2020 to $4,503 today.
It’s 88% more expensive to pay for the median-priced home each month than just three years ago.
We know that incomes haven’t gone up 88% in that time.
In our area, HUD projects the median family income in 2023 to be $125,500, or about $10,458 monthly. That family would pay 43% of their monthly income each month to pay for the median-priced home.
Prices are coming down to more affordable levels because of the rise in interest rates.
In other words, if you’re selling your home right now, there’s an excellent chance it’s priced too high. You’re not alone, of course. Thousands of other sellers are reducing their prices, too.
Unfortunately, sellers don’t always consider how expensive their home has gotten. They only look at the price. And while prices have risen significantly, too – the median price is 25% higher than it was – the jump in monthly payments is slowing the market down and putting a damper on buyer interest.
If you’re selling, you should understand that your home is much more expensive than you may perceive. Buyers know this. They look at their overall payments, not just the price of your property.
Sellers should price at the lowest price they’re willing to accept. If you price too high, your home may never sell as you chase the market. Remember, in a market where prices are falling, and demand is soft, if your property is priced too high on day one, it’ll be even more over-priced ten days after prices have dropped—price for where the market is going, not where it was three months ago.
During the last week:
New Listings – 1268
Back On Market – 290
Price Increase – 83
Price Decrease – 1872
Pending – 1212
Withdrawn – 209
Closed – 1026
Expired – 220
New Listings – 1290
Back On Market – 288
Price Increase – 107
Price Decrease – 1569
Pending – 1174
Withdrawn – 195
Closed – 1054
Expired – 237
Based on data from REColorado®
Trends in Metro Denver
- Home Prices
- How Long It Takes to Sell a Home
- Prices Per Square Foot
- Showings Until Pending
- Active Listings
- New Listings
Real Estate News
“Extremely grateful to have met David. As our realtor, he walked us through the home buying process deftly. He was transparent, knowledgeable, and communicative. Cannot recommend him enough. Thanks David!”
– Josh G., Bennett