The Denver real estate market has been operating as a seller's market since the beginning of this year, primarily due to the limited homes available for buyers to purchase. Low inventory has led to houses staying on the market for shorter periods and higher-priced homes as buyers scramble to place an offer on anything available. As of September 2022, the average sales price for a home in Denver is
$814,861, versus in 2021, when the average sales price was $762,651. The change is an overall price increase of 6.8%. Nationally, home prices are also climbing, so while the Denver housing market is following a similar pattern, its median home price is still slightly below the national average. Meanwhile, interest rates
also keep climbing, a trend that will continue until the end of the year.
With this understanding of the overall national housing market and the Denver real estate market, future home buyers are left with questions. The main question is, what will Denver's real estate market forecast look like for 2023? What trends will we see? Is 2023 going to remain a seller's market, or will it transition into a buyer's market?
Continued home appreciation into 2023
In Denver, home prices are steadily climbing at 6.8% compared to 2021, a trend likely to
continue into 2023. Although there have been predictions as far ahead as
2024 and 2025 saying the market will return to its pre-pandemic levels in concerns to inventory and price, 2023 will still face low inventory issues. On average, houses have been sitting in the market longer in recent months, especially compared to the beginning of this year. Even after August 2022, when a house was on the market for an average of
18 days, September saw homes on the market for a more extended period, averaging around 23 days.
2023 starts as a seller’s market
There are currently fewer houses listed for sale in 2022 than in 2021, with a difference of
11.9% in Denver County. These are not only visible in Denver's housing market, though, as this issue has been growing since 2019, with housing prices increasing by over 30%, combined with inventory reaching record lows by the end of 2021. Unfortunately, this will likely continue into 2023, meaning it will still be a seller's market, at least throughout the beginning of the year. What is the difference between a seller's market and a buyer's market? A seller's market is typically defined by low inventory, where houses are on the market for shorter periods and sold at higher prices. In comparison, a buyer's market is where houses are on the market for far longer as there is more inventory, so houses are sold at lower prices.
2023 will end as a buyer’s market
Although the end of 2022 and the beginning of 2023 will most likely continue to be a seller’s market, there are predictions that the market will switch in favor of buyers
by the end of 2023. Part of this could be the increasing new construction of homes in Denver and the surrounding areas. Compared to the national percentage of building permits for single-family homes, Denver is seeing a
13% rise in building permits in 2022, implying the stabilization of local housing inventory.
Even now, despite houses remaining on the market for shorter periods than pre-pandemic rates, homes are staying on the market for a longer time when compared to 2021. In 2022, houses were on the market for an average of
23 days before selling, while in 2021, houses only remained on the market for an average of 12 days.
Mortgage rates rise, and houses sold will decline
With mortgage interest rates increasing and predicted to increase steadily until the end of the year, home buyers in the market fear that 2023 will see even higher interest rates. Although interest rates on mortgages are predicted to rise, this increase in inventory will likely lead to sellers accepting lower offers on their homes, especially if houses remain on the market for a long time. These conditions work in favor of buyers, and as was mentioned previously, the market will probably flip to favor buyers by the end of 2023.
How to handle the changing market
With all these trends predicted for 2023, what does this mean for future home buyers? Essentially, the market will be balancing itself out in 2023, especially if the predictions of 2024 and 2025 falling back to a pre-pandemic market are accurate. Still, as the housing market persists in its recovery from the pandemic, it may not always be easy to track the market throughout the year.
However, if you are looking into buying a home, having a Denver real estate agent by your side helps alleviate some of the pressure. Recent studies found that 87% of home buyers purchased their house through a real estate agent or broker. Many home buyers work with real estate agents due to their knowledge of the local housing market and the network agents utilize to find listings, even in a challenging market. Agents have access to data that home buyers typically do not, and can track these market changes efficiently and understand both the short-term and long-term effects of the current trends.
Finding the best real estate agent for you
Kelly Thompson can guide you through the process if you are looking into Denver luxury real estate. A Colorado native passionate about connecting her clients with the perfect home, Kelly's creativity and innovative marketing techniques, combined with her abundant resources, make her one of the best agents for anyone looking for Cherry Creek, Washington Park, Hilltop, or Park Hill homes for sale.
Contact Kelly Thompson today to take the first step in your home-buying journey.
