Metro Denver Real Estate Market Update, November 10, 2022

The average rate for a 30-year mortgage is down to 6.62% today. Home prices have been falling for the past six months. Despite the lower rate and lower prices, affordability is a concern for home buyers. 

In many neighborhoods, the median home value is up more than 30% in the past two years. For example, in Centennial’s Chenango subdivision, the median value of homes is up 39.96% in 24 months. In The Pond, in Arvada, the median value of homes is up 37.21% in two years. In The Pinery, in Parker, values are up 39.81%. And in Lafayette’s Heron Lake Meadows, values are up 42.98% compared to two years ago.

Because of the rapid increase in home values, many homeowners are enjoying record-high home equity.

Unfortunately, the dramatic rise in prices is affecting buyers negatively.

Nationwide, the age of first-time home buyers is at an all-time high of 36. First-time buyers in Colorado are feeling the squeeze. Today’s average interest rate for a conventional 30-year mortgage is 6.7%. If a buyer were to purchase the median-priced home and put 10% down, the cost of that home for the first year would be more than $101,000. That includes the down payment, mortgage, taxes, insurance, and PMI. With 3% down, the first year would likely cost a buyer more than $65,600. For first-time buyers – and even move-up buyers and people who are downsizing – these costs are high.

Sellers are still catching on to our new reality. As a result, many are over-pricing their homes and enduring numerous price reductions before their homes sell.

In a recent look at homes for sale in metro Denver, sellers had reduced the price of 58.2% of all active listings, compared to 32.6% a year before. In addition, properties reduced in price spent an average of 71 days in the MLS, compared to 28 days for all listings last month. To attract buyers, sellers must price their homes competitively and prepare them well.