Metro Denver Real Estate Market Update, October 27, 2022

You already know the real estate market has shifted in the past six months. In our area, the median price for a sold home peaked in April at $625,000 and was down to $585,000 last month. 

We work with buyers and sellers and see trends in how each group looks at the market, so we want to share what we know.

We’ve never seen a market change as quickly as it has in the past few months. It’s not a buyer’s market yet, but it’s heading in that direction. Eight or nine months ago, sellers were in the driver’s seat. That’s no longer the case.

Buyers are always looking for a good value. In this market, that’s become even more true. They’re looking for homes that stand out as bargains compared to other homes.

Buyers know prices are falling and think everything is overpriced. When prices are falling – and they have been – the home priced lower than the competition stands out. It looks like a value and gives buyers the impression that sellers priced it right. All the other homes, priced higher, seem overpriced. 

Sellers are in a bind. With falling prices, it’s critical for pricing to be very strategic. Homes must stand out, or sellers will be chasing buyers with price cuts all the way to the bottom of the market. 

In his book Shift, Gary Keller, the founder of Keller Williams, speaks to market changes like this one. He says, “Pricing at the market is really overpricing…and simply too high a risk to take. Whether the market is on the way up or on the way down, sellers should always price to the market they’re headed to.” He adds, “If sellers fall behind a market with falling home values, they can end up chasing the market down, because home values are always falling faster than their price reductions.”

In other words, if you’re priced even slightly above the market today, and your home sits on the market for a week or two, you’ll be even more over-priced. You can reduce your asking price at that point, but you need to reduce it enough to be at or lower than what buyers will pay. If not, prices will continue to decline as your home languishes on the market. Of course, you can reduce the price again, but by then, prices have dropped even further, and you still need to catch up.

Fast sales happen in this market when sellers price homes strategically. Unfortunately, many sellers are pricing too high, and that’s why we’re seeing homes sit on the market for sixty and ninety days while others go under contract with multiple offers in two or three days.