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Interest Rates Rise, Inventory is Down, New Listings Drop in October
Unfortunately, inflation is still close to a 40-year high, and as a result, the Fed raised interest rates by 0.75 percentage points in October. This is the sixth hike this year. The Fed is expected to raise rates again this month, but the hike is presumed to be smaller. This week, interest rate reached 6.95 percent and they are expected to rise again under the Biden regime. According to the Denver Metro Association of Realtors (DMAR), the average home is taking 28 days to sell and fewer homes found buyers in October, with only 3,401 homes going under contract, down from 5,790 in October 2021. Even with fewer buyers out there, homes appreciated year-over-year by 8.22 percent on average. Month-over-month, prices are down 1.36 percent. The average home sale price in metro Denver was $661,335. October saw an increase in active inventory by 115.94 percent compared to October 2021. Metro Denver had only 3,971 homes for sale at the end of October 2021; at the end of October 2022, there was 7,290. More sellers listed their homes on the market in September than in October, and there were more homes for sale overall. In September, there was 7,683 homes available for purchase at the end of the month, and in October, that number dipped slightly to 7,290. A more drastic number is the number of new listings which dropped to 3,837 in October, a 27 percent drop month over month and a 28 percent drop year over year. While inventory is up compared to 2021 and 2020 levels, it is lower when compared to 2019 and 2018, and a historical perspective can be powerful. According to DMAR, the average number of available listings for October 1985 through 2021 is 14,957. Last month in metro Denver, there were 7,290, which is nearly half the historical norm. According to one local mortgage loan company, 71 percent of homeowners in Colorado have a mortgage, and a massive 92 percent of those homeowners have a mortgage rate of five percent or less. Therefore, if interest rates continue to rise, it is reasonable to think that fewer homeowners will put their houses on the market, leading to lower inventory levels. Demand is also down as fewer home buyers are getting into the market, and mortgage rate applications are down 42 percent year over year.
Unfortunately, inflation is still close to a 40-year high, and as a result, the Fed raised interest rates by 0.75 percentage points in October. This is the sixth hike this year. The Fed is expected to raise rates again this month, but the hike is presumed to be smaller. This week, interest rate reached 6.95 percent and they are expected to rise again under the Biden regime. According to the Denver Metro Association of Realtors (DMAR), the average home is taking 28 days to sell and fewer homes found buyers in October, with only 3,401 homes going under contract, down from 5,790 in October 2021. Even with fewer buyers out there, homes appreciated year-over-year by 8.22 percent on average. Month-over-month, prices are down 1.36 percent. The average home sale price in metro Denver was $661,335. October saw an increase in active inventory by 115.94 percent compared to October 2021. Metro Denver had only 3,971 homes for sale at the end of October 2021; at the end of October 2022, there was 7,290. More sellers listed their homes on the market in September than in October, and there were more homes for sale overall. In September, there was 7,683 homes available for purchase at the end of the month, and in October, that number dipped slightly to 7,290. A more drastic number is the number of new listings which dropped to 3,837 in October, a 27 percent drop month over month and a 28 percent drop year over year. While inventory is up compared to 2021 and 2020 levels, it is lower when compared to 2019 and 2018, and a historical perspective can be powerful. According to DMAR, the average number of available listings for October 1985 through 2021 is 14,957. Last month in metro Denver, there were 7,290, which is nearly half the historical norm. According to one local mortgage loan company, 71 percent of homeowners in Colorado have a mortgage, and a massive 92 percent of those homeowners have a mortgage rate of five percent or less. Therefore, if interest rates continue to rise, it is reasonable to think that fewer homeowners will put their houses on the market, leading to lower inventory levels. Demand is also down as fewer home buyers are getting into the market, and mortgage rate applications are down 42 percent year over year.
