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Midway Check-In
We are halfway through May. This is how the numbers stack up versus the exact time last year.
Larimer County:
- Inventory up 26%
- Closings down 4%
- Average Prices up 13%
Weld County:
- Inventory up 18%
- Closings up 6%
- Average Prices down 5%
Forecast Takeaways
Here are some of the big takeaways from our annual Market Forecast with Economist Matthew Gardner:
- Interest rates will continue to trend down during the year and reach 6.08% by the end of 2024.
- Home prices will have another year of modest gains increasing 2.0% to 2.5% in Northern Colorado
- 53% of homeowners in Larimer County and 38% of homeowners in Weld County are “Equity Rich” meaning that they have at least 50% equity in their homes.
- Inventory levels will increase in 2024 but will remain below normal which protects prices from any sort of major decline
To receive a copy of the full slide deck from the Forecast, feel free to reach out to us!
Out of the Gates
How is the year starting? All of us in the real estate industry are especially curious to see how 2024 is starting off after the first slow real estate year in a long time.
Rates have settled down and are trending down.
Prices have shown resilience and continue to go up.
But, how about transactions? Are they picking up after a year that saw an 18% decline in the number of closed residential properties?
It turns out the year is starting off strong but not unusually strong.
Pending transactions are up in Larimer County 7% year over year and up 3% in Weld County.
So, we are already seeing signs that 2024 will be a year of growth compared to last year.
No Drop
The numbers are in and it turns out that not even 8% rates could make prices drop in 2023.
When mortgage rates jumped this last year, many people believed that home values would fall as a result.
The fact that prices stayed flat in 2023 even though interest rates doubled between March 2022 and October 2023, shows that values along the Front Range are incredibly resilient.
Here are the 2023 average prices along the Front Range and their change compared to 2022:
Larimer County: $621,538 / 1%
Weld County: $527,600 / 1%
Metro Denver: $679,710 / 0%
Most Surprising News
The most surprising piece of news for our friends and clients is that prices are essentially flat compared to last year. People find that surprising given what interest rates have done over the last 18 months. They wonder, how could prices not fall significantly after interest rates jumped considerably?
The answer is the fundamental economic lesson of supply and demand.
There is enough demand in the market for the current supply to keep prices stable even in an environment of higher rates.
Now that rates are (finally) trending down, it gives us even more confidence about the continued growth of real estate prices along the Front Range.
Here is a look at how home prices compare to one year ago:
Larimer County = Down 0.8%
Weld County = Up 3.4%
Metro Denver = Up 0.8%
Highly Active
In addition to tracking the average price for sold properties, it is also interesting to track the average price for active properties.
Asking prices are up across all markets when compared to the same time last year.
Here are the average list prices for residential properties along the Front Range:
- Larimer County = $893,000 (8% higher than last year)
- Weld County = $702,000 (6% higher than last year)
- Metro Denver = $847,000 (5% higher than last year)
These asking prices are higher than average sales prices by approximately 30%. This is because there are many high-end properties on the market which take longer to sell and which pull up the average.
Increasing Reductions
More and more sellers are having to reduce their listing price.
Nationally, 37% of all home sellers have recently had a listing price reduction. This is according to a recent report from Altos Research.
This is up from 30% in May and is now at the second-highest level since 2018. The highest it has been in the last five years is November 2022 when it stood at 41%.
A “normal” range is between 25% and 30%. Today’s number is a result of softening demand based on higher interest rates.
Proper pricing is always important for a seller and is especially so now as we enter a typically slower time of the year with added challenges related to interest rates.
Year to Date
Here is an interesting look at the market year to date versus the same time period in 2022.
Bottom line, the number of transactions is down considerably, and prices are flat to slightly down.
Larimer County = Sales down 17.5%, prices up 0.7%
Weld County = Sales down 29.6%, prices down 2.2%
Metro Denver = Sales down 22.4%, prices down 2.9%
High Active
The average price of all active listings is likely much higher than you think.
For example, the average listing price of the nearly 5000 properties for sale in Metro Denver is nearly $1,000,000.
Here is the average price of all active listings along the Front Range:
Larimer County: $886,000
Weld County: $736,000
Metro Denver: $939,000
Not What Many Thought
Despite higher interest rates, prices did not decrease like many people thought. They certainly have not crashed like many thought.
Average prices along the Front Range have seen only a slight decrease versus last year.
The average price in May this year has decreased versus May of last year by:
2.5% in Larimer County
3.2% in Weld County
2.8% in Metro Denver
When we take a closer look, what is apparent is that average prices have decreased based on the type of properties that are selling versus last year.
Specifically, there were more $1,000,000 – plus homes selling a year ago versus today. Those higher-end transactions in 2022 increased the average price.
In May of 2023, $1,000,000- plus transactions decreased versus May of 2022 by:
33% in Larimer County
29% in Weld County
35% in Metro Denver
So, we don’t see that prices have gone down. We see that average price has slightly decreased because they aren’t as many luxury sales pulling up the average.
