As the Denver real estate market continues to evolve and change with the weather, the question on everyone’s mind is whether or not we are in a buyer’s market. Traditionally, a market with less than three months of inventory is considered a seller’s market. In direct relation to that, a market with more than six months of inventory is considered a buyer’s market, which means that three to six months of inventory is defined as a balanced market. These benchmarks help define the Denver Metro current market, which is notably changing. 

Currently, the $100,000 to $199,999 and $1 million and over segments for detached homes are pushing the three percent threshold, with 2.75 percent and 2.62 percent, respectively. The $1 million and over segment for attached homes is at 2.83 months of inventory. Using months of inventory as a metric indicates that Denver Metro is moving toward a balanced market. 

Buyers can now take time to find the right house and negotiate the purchase price, inspection-related repairs and appraisal values. While interest rates are higher than at the beginning of the year, some buyers are getting accustomed to the increased rates and are utilizing available marketplace tools. However, for many sellers, it likely feels like the rug has been pulled out from underneath them. Price reductions are rising, while active listings at month end rose 10.72 percent to 7,683. Pending sales declined 15.41 percent for both detached and attached homes month-over-month, which directly relates to a 6.38 percent decline in sales volume month-over-month. 

“I believe we are moving toward a balanced market, which we haven’t seen in over 16 years,” commented Libby Levinson-Katz, Chair of the DMAR Market Trends Committee and Metro Denver Realtor®. “A traditional cycle for the Denver real estate market is seven years. Due to an economic crash and a global pandemic, the cycles were extended, but a correction is needed. The market is entering a period of neutrality where the bullish ways of extreme markets make way for a stage of compromise, with buyers and sellers working together for a win-win experience.”

Our monthly report also includes statistics and analyses in its supplemental “Luxury Market Report” (properties sold for $1 million or greater), “Signature Market Report” (properties sold between $750,000 and $999,999), “Premier Market Report” (properties sold between $500,000 and $749,999), and “Classic Market” (properties sold between $300,000 and $499,999). 

With kids back in school, the Luxury Market sellers focused on getting their homes on the market, and it showed. New luxury listings were up 18.86 percent from August, with a total of 649 homes priced over $1 million hitting the market in September. The attached Luxury Market saw a massive increase in new listings, up a notable 66.67 percent from the prior month. With 5,962 new listings hitting so far this year, the Luxury Market is enjoying the highest amount of inventory in years.

Luxury buyers also have more time to decide which luxury home to buy. Both detached and attached markets saw a significant increase in the average days in the MLS from August, up 31.82 percent or 29 days for detached, and 40 percent or 35 days for attached. This slowing market is echoed in the drop in pending sales in September, which decreased by 16.35 percent for detached homes and 8.33 percent for attached. The spring frenzied bidding wars also seem to have subsided: the close-price-to-list-price ratio dropped below 100 percent again this month, to 98.21 percent for detached and 99.30 for attached.

Although the detached Luxury Market enjoyed an annual appreciation from a price per square foot perspective of 9.41percent and a flat month-over-month appreciation, the attached market suffered a decline in annual appreciation of 0.18 percent and an even bigger decline month-over-month, by 5.26 percent.

“The luxury segment now has the highest months of inventory for any part of our market, with 2.73 months of homes for sale,” said Colleen Covell, DMAR Market Trends Committee member and Metro Denver Realtor®. “Traditionally, experts say that less than three months of inventory still constitutes a seller’s market, but anecdotally, it doesn’t feel like a seller’s market anymore. We are experiencing full inspection objections, price reductions, no competing offers, no appraisal gaps and even contingent offers. The question on everyone’s mind is are we finally in a luxury buyer’s market? The technical statistics may say ‘not yet,’ but it sure feels close.”

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