The market returns to "normal." A look at then and now...
Is there such a thing as "normal" anymore? I remember clearly March 13, 2020. The last day of "normal" in my world. The last day my children would attend in person school that year. Lockdown went into affect and everyone was wondering what the future would hold.
I don't think anyone expected the huge rise in the real estate market that would begin to unfold on that particular day and I am not so sure anything is "normal" anymore, but the real estate market appears to be headed back in that direction.
In order to understand where we are now, let's take a look back.
This is the market snapshot from February 2020 provided by the Denver Metro Association of Realtors in March 2020 (they show data from the month prior).
This reflects the final month of "regular" activity in the real estate market prior to lockdown beginning. What we see here is an increase in homes being sold with higher prices and in a shorter amount of time compared to January 2020.
According to Freddiemac.com, the monthly average interest rate at this time was 3.47%. If we look back just one year further, to February 2019, this number was 4.37%.
Now, let's skip ahead a little bit and take a look at August 2020.
Lockdown had been in full effect for a while now and working from home was becoming the next big thing. People were now able to relocate to the place of their dreams and still keep their jobs. So even though, the arrows point downwards, you can see that the sheer number of closed homes compared to February of 2020 was over 2,000 homes more. And just look at the difference in the average and median prices of the homes. WOW!! A lot of homes were selling for high prices, and much quicker than prior to lockdown. The 2.94% interest rate was also incredibly attractive at this time in the pandemic compared to just one year prior, August 2019, when the interest rate was 4.55%.
Two years later and a lot of people are wondering if the housing market is in trouble. Let's check the numbers from today and see what we can observe.
One the left, you will see the stats from February 2022 and on the right August 2022.
When you compare February 2020 and February 2022, you see a staggering difference. Average home prices had increased by by nearly $200,000. There were more than 3,500 more homes for sale in 202o than 2022, which contributes enormously to the average sale price figures. Supply and demand is absolutely a force to be reckoned with. February 2022 showed an average interest rate of 3.76%, which created serious urgency for buyers to purchase quickly and lock in a great rate.
So today... end of August/early September 2022. What do we see? The entire graphic has literally flipped upside down, but looks incredibly similar to the February 2022 graphic. What we are seeing now is a big increase in the number of homes on the market and a much smaller rate of growth in average home prices. NEWS FLASH FOR BUYERS: THIS IS GOOD NEWS FOR YOU!!
The days on the market to get a home sold are also on the rise, but remain lower than the months during the height of the pandemic. August 2022 had an interest rate of 5.22%, which is definitely contributing to the shifting in the market, however, it isn't alarmingly different than the figures of 2019.
The graphic says it best "August 2022 showed a much needed end of summer reset for Denver Metro housing."
The days have returned where sellers are going to need to prepare their home for sale.
Clean and staged homes are going to sell quicker than homes that are not ready for showings.
Patience will be a virtue as it might take longer than a few hours to receive an offer.
The days have returned where sellers are going to entertain home inspections and expect to make some repairs.
Sellers no longer have to be scared to become buyers.
None of this is "new." This appears to simply be a return to normal. A return to pre-pandemic ways of buying and selling real estate in Colorado. So keep calm and give us a call if you have questions. We can get you all the answers you need to help you buy or sell a home successfully in today's market. I can tell you, it isn't scary, but it isn't the same as it was yesterday either. Together, we've got this!