Is the Market Slowing or Is it the Season

Anyone who has traveled around Denver has probably noticed a few more For Sale signs and fewer Under Contract and Sold Signs. The view may be somewhat deceiving. Sales continue to be strong HOWEVER inventory of properties available has also increased, thus the perception of more homes on the market is actually the reality.

As a broker I try to look at statistics over time to assess the true activity in the market. Two statistics I like to follow are Price Decreases and Back on the Market. Price Decrease and its increase of units may indicate a market in which the original listing price is meeting resistance. I am seeing this in the upper-end of the market where it has not been uncommon to see 30% increases over sale prices from two years prior.

The Back on Market is for me more concerning. While issues do arise during inspection (and can usually be resolved with an Inspection Resolution the other reasons include financing and appraisals. Back on market can be troubling as when a unit re-enters the market the Days on Market and subsequent frustration of sellers and skeptical buyer will thus increase inventory.

In general Metro Denver does enter into seasonal slowness beginning in November and usually lasting through President’s Weekend in February. The winter is actually the perfect time to prepare a residence for sale in the Spring.

Thus am I worried? No. I believe we are in a seasonal shift and the underlying economy continues to strengthen. What will be interesting is when the Federal Reserve raises Interest Rates. Will buyers be motived to avoid an interest rate increase and/or will sellers lower prices to compensate for higher interest rates? Only time will tell.

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