When 2022 ended, Denver metro realtors predicted interest rates would drive this year’s housing market.
And while they expected the rate increases would stabilize the market, few anticipated those rates would suppress sales activity as much as they did in 2023.
As 2023 ends, Denver metro realtors say they’ve learned five lessons this year:
- Rising interest rates depressed inventory more than anticipated, as homeowners with rates below 4% were reluctant to sell their homes and move up to bigger properties with higher prices and interest rates.
- Despite higher interest rates, more first-time buyers purchased homes in 2023.
- Pricing became paramount as buyers shunned mispriced properties.
- Buyers wanted turnkey properties and avoided fixer-uppers.
- Limited inventory kept prices high, with the median price for a single-family home remaining at $564,700 in November, down slightly from $565,250 in November 2022.
Interest rates suppress inventory
Bret Weinstein with Guide Real Estate said rising interest rates created a major market slowdown.
“We thought prices would drop, but instead, they stabilized,” he said. “The interest rate increases suppressed buyer interest.”
Those higher rates also kept some people from selling, further depressing available inventory, said Ashleigh Fredrickson with The Agency.
“It was too hard for some people to say goodbye to their low rates. They couldn’t justify leaving a lower rate to move up to bigger property.”
First-time homebuyers jump in
According to the Denver Metro Association of Realtors 2023 Denver Profile of Home Buyers and Sellers data, 32 percent of metro homebuyers this year were first-time buyers, up from 26 percent in 2022.
Those buyers also made more money and were younger than in the past.
Denver buyers had a median income of $146,900.
The median age of home buyers was 43, with 27% of buyers falling in the 25- to 34-year-old age group and 25% in the 35- to 44-year-old age group.
That report also showed:
- 60% of buyers were married couples
- 16% were single females
- 10% were single males
- 10% were unmarried couples.
Time on market matters
In the past few years, houses sold quickly, no matter their condition, but that was no longer true in 2023.
Lauren Cotlar with 8z said buyers were nervous about houses that sat on the market.
“After years of houses flying off the shelves, too much time on market became a stigma,” she said.
“When houses sit there for longer, people think there’s a reason or a problem. But the only reason may be the house was overpriced or not marketed well.”
Sellers who wanted to maximize their potential profit wanted to price high, but Cotlar said she counseled caution.
“You could price on the lower end and hope for multiple offers, or price it higher and know the house might sit.”
Move-in ready
While buyers want the best value for their dollar, they want to avoid buying homes they must repair or upgrade.
“Buyers want turnkey properties with amenities. That’s what’s winning in the market,” said Delroy Gill with LIV Sotheby’s.
“They look at what the home offers but also want to know what benefits the homeowners’ association, neighborhood, or community provides. Is it walkable? Are there restaurants, stores, gyms, and parks nearby.”
Cotlar agreed that buyers want quality and homes they won’t have to improve immediately.
“When we had houses with multiple offers, a big part of that was the quality. Buyers wanted turnkey homes, they tend to go quicker.”
