2022 Denver real estate is going to be a bumpy ride!
2021 saw the largest increase in home prices we have experienced overall in the Denver real estate market. Prices surged to record levels, and inventory was the largest continuing issue: it continued to drop to a new historically low level. The Denver luxury real estate market has also experienced large price increases and more bidding wars than we have ever seen for that market.
What should you expect for home prices in the Denver real estate market?
Inventory. . . what inventory?
Much of the country has been experiencing record low real estate inventory, and the Denver metro area is no exception. The challenge for Denver real estate is that we have already been experiencing record low inventory and rapidly increasing population for years before this recent nationwide real estate boom. That created the perfect storm for an unprecedented Denver real estate seller’s market.
Then and Now
At the end of 2020, the Denver/Boulder MLS showed inventory of 6,632* homes available for sale; that is active inventory across all price ranges and types of residential homes. As of December 21, 2021, the Metro MLS showed 1,912 active listings. That is more than a 70% drop in active inventory!!!
The Law of Supply & Demand
The most basic, consistent, and proven economic theory is the effect of supply and demand. As long as demand remains high with dropping supply, expect a wild ride! We continue to see lots of buyers with high incomes and plenty of money to be competitive.
Mortgage rates rising?
Mortgage rates are expected to rise in 2022. The questions are “How much?” and “Will they have a significant impact on the seller’s market?”
Even if rates rise, they are unlikely to have a large impact, most likely they will only take the edge off and reduce a buyer’s price range, creating more competition at the lower price points. The ratio of buyers to homes for sale is so far out of whack that it will take large increases and multiple other factors, like more people selling, to bring any amount of noticeable relief for buyers.
Some buyers may choose to put off a home purchase, but even if a large percentage of would-be buyers decide not to buy, there will still be multiple buyers for every home in most price ranges.
Hopefully more people decide to sell, but don’t count on it.
Denver is a ‘place to be’ for many with work-from-home options, and our weather and lifestyle are no longer a secret. Homeowners are just not looking to sell, and there are a number of reasons why.
- Rate lock – Homeowners are locked into a super low rates and don’t want to give it up
- Renting instead of selling – Rents are up, so many people can rent out properties they own for solid cash flow
- Nowhere to go – Selling it great if the sellers have a place to go; otherwise, they face the same fierce competition to find a replacement home that other buyers face
What to expect for 2022 Denver Real Estate
Expect continued low inventory and high demand; even as mortgage rates potentially rise, many buyers will be rushed to lock in a low rate and secure a home. If you thought last year was crazy, 2022 is shaping up to be even more competitive. Waived contingencies, appraisal guarantees, limited inspections, and extended occupancy after closing will continue to be the norm in most price ranges and areas.
How to prepare as a Buyer or Seller
Don’t panic, you can be successful in any market if you have a plan and solid understanding of the market. Know the market you are selling or buying in, as they do vary by neighborhood and price range. Planning and preparation are key to success, so make sure you are getting ready far in advance of your plans to buy or sell.
- Failure to plan is planning to fail – Don’t skip planning
- Know the market for your price and area. Even the style of home (mid century moderns are super popular) can make a difference in the price you can achieve
- Get your home ready – A little effort and the right changes will make a huge difference even in this seller’s market. Have you agent go over the home with you, and have a plan of action
- Know your goals and options – Have a plan for multiple contingencies so you can adjust as needed
- Know what contract terms are best for your needs – Terms can be as valuable as price
- Have a solid plan and strategy for pricing and marketing – Overpricing will keep you from getting the best price possible, even in a seller’s market
- Have your financing in order – Have a great lender who is responsive and will work well with your real estate agent
- Know your finances – Be comfortable with payment and cash requirements for a range of possibilities
- Understand the terms that may be required – Understand the answers to questions such as “How does an appraisal guarantee work, what is a limited inspection, what is a post closing occupancy agreement, and how does my down payment and loan type affect my offer in the eyes of a seller?”
- Prepare and plan early – Start looking at options for your price range and preferred areas early so you feel confident in your choice when making an offer; regret is often the most cited problem for many homebuyers
- Don’t wait to see those homes, and be flexible – If you wait, it will be gone; flexibility will continue to be a key to success. Make sure you can adjust schedules as needed, and work with a real estate agent who is super responsive and knows how to handle the this market and adapts as needed to be the best advisor.
Here we go again!
The 2022 Denver real estate market will continue to challenge buyers and leave sellers firmly in the driver’s seat. Stay calm, remove your emotions as best you can, be methodical and deliberate, and understand the market, the price range, and area where you are buying or selling.
What do you have to lose? Discuss options no obligation!
If you want to talk about your options and whether this is a good time for your real estate purchase or sale contact Matt to schedule an appointment 720-260-0180 or Matt@MileHighHomePro.com
Over 25 years as a licensed real estate agent and a top 1% sales production consistently to ensure your success.
*Per Denver Metro MLS REcolorado statistics 12-21-21 for historical data