Real Estate Market Highlights Feb 2023
The real estate market has had a strong start to the year, with both buyer and seller activity increasing. This is reflected in the nearly 50% increase in listings moving from Active to Pending status from December to January, indicating that more closings are expected in the upcoming months.
Despite a 69% increase in new listings from sellers compared to December, inventory levels remain low, particularly in the more affordable price ranges. High prices and mortgage rates mean that prospective sellers have little motivation to list their homes.
Median closed prices have been decreasing steadily since their peak in the spring of 2022, with prices dipping again in January. The current median closed price is now 14% lower than the peak in 2021. This decline is due to buyers exercising their negotiating power, which is keeping home prices in check. In January, the median closed price was 4% lower than the median list price.
In addition, more and more Colorado brokers are entering their listings in REcolorado, allowing for the production of rental market statistics. The rental market has seen year-over-year gains, with an increase in the number of properties leased and the median leased price.
Home shopping activity in the Denver Metro area experienced a significant decline in the months of November and December, reaching record-low levels. This trend resulted in a decrease in home closings in January 2023. Compared to the same month in the previous year, home closings were down by 30%. Furthermore, home closings were 25% lower than the number of closings that occurred last month. This suggests that the lower home shopping activity in the last two months has had a noticeable effect on the number of homes being sold in the Denver Metro area.
The median closed prices of homes have been declining steadily since reaching their peak in the spring of 2022. In January of 2023, these prices once again dipped, and are currently 14% lower than the peak that was reached in 2021. This decline is a result of buyers exerting their bargaining power, which is helping to keep home prices under control.
Additionally, in January, the median closed price was 4% lower than the median list price, indicating that buyers are successful in negotiating lower prices for homes. This also suggests that the real estate market is currently favoring buyers, who have the ability to negotiate for more favorable terms in their home purchases.
Days in The MLS
The Days in MLS metric, which measures the number of days it takes for a listing to transition from Active to Pending status, indicates that homebuyers are taking their time to make purchasing decisions. In January of 2023, the median number of weeks it took for shoppers to execute a contract on a home was 5. This suggests that homebuyers are not feeling rushed to make decisions and are taking a more measured approach to the home buying process. This could be due to a number of factors, such as the current buyer’s market, where there are more homes available than there are interested buyers. Additionally, homebuyers may be taking their time to carefully consider their options, ensuring that they find the right home that meets their needs and budget.
In January of 2023, there was a month-over-month increase in the number of new listings that sellers brought to the real estate market. This increase was a positive development, as it provided more options for potential homebuyers. However, despite this increase, the New Listings metric was still 18% lower than it was during the same period last year. In fact, it is also lower than any January on record, indicating that inventory is currently a significant challenge for the real estate market.
One reason for the low inventory is that many homeowners are choosing to remain in their current homes rather than selling them. This is likely due to several factors, including the current high home prices, which make it difficult for many homeowners to find a new property that fits their budget. Additionally, many homeowners may be reluctant to move due to the ongoing COVID-19 pandemic and related concerns about safety and health. All of these factors have contributed to a low inventory, which may continue to be a challenge for the real estate market in the near future.
In January of 2023, there was a noticeable increase in home shopping activity, which resulted in a 49% increase in the number of listings that were pending sale, as compared to the previous month of December. This increase in home shopping activity is a positive development for the real estate market, indicating that there is renewed interest among potential buyers.
However, it is important to note that despite the increase in pending listings, the number of pending listings in January is lower than what was seen in any January since 2012. This indicates that there are still fewer homes available for sale than in previous years, which may be a result of several factors, such as high home prices, low inventory, and homeowners choosing to remain in their current homes. While the increase in home shopping activity is a good sign for the market, the low number of pending listings suggests that the overall supply of homes remains limited, which could impact the market in the coming months.
Activity By Price Point
In January of 2023, the majority of homes that both closed and became new listings for sale were priced in the $400,000 to $500,000 and $500,000 to $600,000 price ranges. This indicates that these price ranges are currently in high demand among homebuyers.
Additionally, there has been an increase in demand for homes priced at $1 million and higher. This trend suggests that there is a growing interest in luxury properties among potential buyers, possibly due to factors such as an improving economy and high-income earners looking to invest in real estate.
However, it is important to note that across all price ranges, the median number of days that a property was actively available in the MLS has increased. This means that homes are taking longer to sell than they did previously, which could be due to a variety of factors such as high prices, low inventory, and increased caution among potential buyers.
Interestingly, moderately priced homes are moving off the market at a faster rate, despite the overall trend of increasing days on the market. This could be because these homes are more affordable and thus more accessible to a larger pool of potential buyers. Overall, these trends indicate that there is still strong demand for homes in the Denver Metro area, but that buyers are being more cautious and taking longer to make purchasing decisions.
Active Listings By Volume
In January, the standing inventory of homes, defined as the number of home listings that were actively available for sale at the end of the month, returned to pre-pandemic levels. This means that buyers have a greater number of options to consider and are taking their time to make purchasing decisions.
Despite the increased inventory, the gross volume of sales in January amounted to over $1.3 billion, which is a 28% decrease compared to the previous year. This decline in sales can be attributed to a decrease in the number of closings during the period.
The rental market statistics for January 2023 were produced from rental listings entered in the REcolorado MLS database. The data shows a year-over-year increase in the number of properties leased during the period. This indicates that demand for rental properties is on the rise.
The median leased price per square foot also increased, reflecting tenants’ willingness to pay more for suitable properties. In January 2023, the median leased price was 8 dollars per square foot, which is a 3% increase compared to the previous year.
The median days a rental property spent on the market also increased slightly, with a 9% year-over-year increase from January 2022. Meanwhile, the median leased price per bedroom increased by 1% year over year.
Overall, the rental market in January 2023 saw healthy year-over-year gains in terms of the number of properties leased and median leased prices.
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