The housing market of 2023 told a very interesting story. Most analysts believe 2024 will not be nearly as interesting. The Federal Reserve seems to be done hiking interest rates in an attempt to curb inflation. Housing valuations, however, continue to rise at a steady pace across the country (with few exceptions). Colorado, and especially the Denver Metro Area, is experiencing similar trends to the nation at large. Let’s take a closer look at how 2024’s housing market is trending, and what that means for you as a buyer or a seller.
Current Market Trends
High Mortgage Rates Forbes has the national home mortgage rate sitting at 6.69% at the beginning of January 2024. This has risen from the 2.5% – 3% in the pre-pandemic mortgage interest rates. Some analysts predict interest rates may start to fall, as the Federal Reserve sees easing tensions in the economy and, therefore, could lower rates. We’re not going to hold our breath, but if this were to happen we can expect an increase in sales.
High Home Valuations Home sales prices and valuations did not rise much nationally in 2023. The national average peaked in Q3 at around $435,000 according to The Ascent. Colorado Denver Metro Area seems to have peaked in the summer, somewhere between Q2 and Q3 around $570,000 according to the DMAR statistics, but fell in Q4 to $565,000.
Low Inventory On MLS The high home mortgage interest rates continues motivating potential sellers to remain in their current homes. Forbes claims “… many homeowners [are] “locked in” at low interest rates or [are] unwilling to sell due to high home prices, demand continues to outpace housing supply—and likely will for a while.” Colorado has about 3.5 months of inventory based on the current sales rates, according to DMAR. In a healthy market, with sellers replenishing inventory levels frequently, 3.5 months would be a good number. Fewer and fewer sellers are entering the market each month, as average time on MLS continues to rise, indicating that the 3.5 month inventory level may lessen to 3 months. This will continue to drive prices up in the Denver Metro Area.
Softening Sales According to Bankrate, 2023 saw a 6.2% decrease in housing sales. Most of this decline occurred in the final 5 months of the year, coinciding with declining inventory levels. Buyers and sellers alike are paying close attention to interest rates, prices, and overall economic inflation. This trend from 2023 seems to be carrying over into 2024, with low inventory, slowly rising prices, and hesitant buyers.
What To Expect
Spring Inventory Increase As every year can expect, the spring will see an influx of houses added to MLS for sale. This year, there may be quite the increase in inventory come the spring thaw. We noticed a lot of homeowners delay listing their properties last year for fear of a diminished buyer’s pool. Though this fear still lingers with higher mortgage rates, continued inflation, and a burgeoning jobs market. Hopefully with more inventory comes stable housing prices and more negotiation power for buyers.
Steady Mortgage Interest Rates Though we’ve watched interest rates hang around 7% for almost a year, it also doesn’t feel like there’s going to be a decrease in interest rates any time soon. The Federal Reserve is still monitoring inflation as costs of goods and services continue to rise at a steady pace year-over-year with no sign of slowing down more. This could mean they will keep interest rates steady, or increase the interest rates slightly in 2024 to help curb inflation.
High Home Sales Price Home valuations are not likely to fall in Colorado in the coming years. The demand is just too high and people continue to move to our state looking for our idyllic lifestyle. With big corporations scooping up homes listed on market and transitioning them to rentals, rather than reselling, the market is most likely going to continue to see prices rise steadily. The last few months of 2023 and the beginning of 2024 showed a slowing of price increases, but as the selling season kicks off in the spring, prices will most likely jump another percent or two.
Cost Of Living Rising As inflation and home valuations rise, so too does the cost of living. Since RTD and other mass transit options remain stagnant, medical insurance premiums continue to increase, and other associated costs of living mirror the inflation across the country, the overall Cost Of Living will follow suit. Make sure you’re making plans to mitigate certain costs to help maintain your standard of living in Colorado.
What do you think the 2024 real estate market will look like? Drop a comment below, or join us on Facebook to see what the Longmont Real Estate Market is looking like now.
