January 2023 data reflects contrasting messages from buyers and sellers with a continual need for more inventory in the Denver Metro market.
Buyers are back in the market with bidding wars being reported again, much to the delight of sellers. Active listings dropped 13.39 percent to 4,120 properties, with new listings increasing 65.20 percent to 2,858 listings. While activity picked up from the holiday season, median days in MLS also increased by 13.33 percent to 34 days, starkly contrasting from a year ago when the median was five days.
“Buyers are still in the market and they have wrapped their heads around higher interest rates, factored in rate buydowns into their purchase costs and are simply taking their time to find the right home,” commented Libby Levinson-Katz, Chair of the DMAR Market Trends Committee and Metro Denver Realtor® .” The last few years have been record-breaking, but as our market stabilizes it’s important to look at how 2023 compares to 2019, hence removing the anomaly of how COVID-19 affected our local market. If we look further back, active listings at month end are only down 29.94 percent compared to 2019 and the new listing number of 2,858, is a 40.84 percent decrease from 2019 and also the lowest we’ve seen in the last five years.”
Although homes are selling slower, the median close price dipped slightly by 3.33 percent to $536,500 market-wide with the real change occurring in the attached market with a 2.93 percent decrease to $397,000 compared to a 0.83 percent decrease in the detached market to $595,000. Additionally, the close-price-to-list-price ratio decreased 0.27 percent month-over-month to 98.15 percent, representing a 3.90 percent decrease from this time last year prior to the seismic interest rate hikes that occurred in mid-2022.
These numbers continue to showcase Denver’s stability, as prices have not varied even though affordability for buyers has been greatly impacted by rising interest rates. The sweet spot in the market continues to be the $500,000 to $749,999 price range.
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).
This January, the Denver Metro Luxury Market saw inventory increase dramatically from December, with 308 new luxury homes coming to market for an increase of 109.52 percent. The number of homes that went under contract also dramatically increased from the previous sleepy holiday month, up 58.47 percent. Although the Luxury Market is shifting into a higher gear, this segment is still low on inventory, short by 6.38 percent from the number of new listings in January 2022.
One of the most revealing takeaways from January’s market was a notable difference in performance between luxury detached and attached homes like condos and townhouses. The most dramatic difference between the two luxury segments was in price performance. Although both detached and attached homes saw a decrease in price from the previous month, as viewed by average price per square foot, that decrease was larger with attached homes down 11.54 percent, than detached homes down 6.22 percent. A broader analysis reveals that attached homes suffered annual depreciation of a whopping 26.98 percent, now at $460 per square foot versus $630 per square foot in January 2022. Detached luxury homes fared much better, enjoying an annual appreciation of 0.87 percent, reflecting price growth from $344 per square foot to $347 per square foot.
The slowdown in the attached Luxury Market was also demonstrated by how long it took for a home to sell. Sellers in both segments saw an increase in the number of days in the MLS month-over-month, with detached homes increasing from a median of 25 days to 47 and attached homes increasing from a median of 28 days to 61.
“Some of that increase in time is to be expected over the holiday season when potential buyers aren’t as engaged with the market,” said Colleen Covell, DMAR Market Trends Committee member and Metro Denver Realtor®. “The statistic that better highlights how much the attached Luxury Market has slowed is the year-over-year days in MLS: the attached market slowed by 1,933.33 percent. This time last year, a luxury condo went under contract in a median of three days. Today, that condo was on the market for two months, or 61 days representing the largest increase in year-over-year days in MLS for any segment of the market.”