February 2022 Market Update

While traditionally the market sees a 70 percent increase in new listings from December to January, the market ended down 17.77 percent in new listings compared to 2021, a 31.04 increase from the previous month. Likewise, the market ended with month-end active listings at a historic low of 1,184. 

To put into context, that is over 10x less inventory than normal. 

• Denver metro's active listings available at the end of the month declined by -19% over last year.

• The January median sale price was $540,000 up nearly 20% from last year.

• The average home spent 20 days on the market during January, 7 fewer days than the same time last year.

• The average price of a single-family detached home is currently $609,132 an increase of $61,375 from the same period a year ago.

Introducing the Compass Luxury Division’s 2021 

A lift ticket up a majestic mountain freshly blanketed with snow is a ski enthusiast’s ticket to paradise, especially when apres-ski is set in an exquisite alpine estate.

As we enter the era of rising interest rates, many are being very dramatic about this topic as if this has never happened before. Some cry that rates will jump to 10%+. They are not. They are extremely low and hopefully remain under 5%, which is still very low. We have been spoiled rotten by many years of low-interest rates. 

1. When interest rates rise, it's usually a sign of an overheating or rapidly growing economy. And rising incomes. And rising rates may slow inflation.

2. Anyone thinking of buying a home now may want to accelerate the process to lock in rates before they go higher. This could fuel home prices to rise till the supply-demand ratios become more balanced.

3. As rates rise, fewer people will be able to afford certain homes you and your buyers may be bidding on, which reduces the number of multiple bidders, especially in overheated areas with more limited supply.

4. Sellers may re-adjust their pricing expectations to more realistic levels.

5. The excessive price increases should slow, creating more buying opportunities.

6. Higher rates may start to alleviate the dramatic inventory shortages around the country.

7. The price gougers may lose their audience as people cannot afford to pay those extra pricing excesses.

8. Mortgage lenders who now may see lower volume may become more competitive to keep volume up.

9. Most people don't stay in a home for 30 years. The average is around 13 years. So the extreme focus on 30-year fixed-rate mortgages may shift further towards shorter term.

10. The excessive pace of the market could slow a bit, allowing people to breathe better while making these big decisions.

11. Maybe some building costs will ease, or the excessive builder price-gouging that some are getting away with right now, thereby bringing down some building and renovation costs.

12. I would suspect those waiting to sell may now see the window for peak pricing closing and list.

13. Those who rely on savings stand to earn more interest income from their cash investments and will have more money to spend, further fueling the economy. About 70% of the US economy is consumer spending.

14. Higher rates may drive some to rent instead of buy, further fueling rental prices and making investment properties even more attractive to those diversifying investment portfolios. Higher returns in an inflationary environment can be a 'safer' place for cash.

Let us not forget: a Home Buyer getting a 4% interest rate on a 30-year fixed mortgage on a $400,0000 home has a monthly mortgage payment of $1,900. The monthly payment for this same buyer with a 5% rate on a 30-year fixed mortgage rises to $2,138. A 1% increase in interest raises this monthly payment by $238, or roughly 13%, a very manageable number for most in a strong economy with rising incomes. 

*Source: Leonard Steinberg

It's with tremendous gratitude and excitement that I share with you all my new partner, Erinn Corson, who has joined The Pitkin Group. As 2022 begins, we are looking forward to serving and advising our clients and the Denver-metro community with even more impact and insight into our booming Real Estate market.