At the end of 2022 economists predicted that 2023 would mark a reset in the Real Estate market after two years of pandemic inspired record low mortgage interest rates, low housing inventory, and the subsequent inflation in home prices. So far these predictions are proving true. A notable slowdown began in November 2022 when rates reached a 20 year high of 7% (30-year fixed) marking a tangible shift in the minds of buyers and sellers.

Today, rates are hovering in the 6% range and active buyers are forced to adapt or hold off. With fewer active buyers, competition is down but there is still the issue of limited homes for sale. The difference from last year is that many homes are selling slower and at lower prices.

While low inventory is a major defining factor in both the hot market of the past two years and the current market, the difference in mortgage interest rates sets them apart in a big way. Homes in Nederland were selling at 104% of the list price last spring compared to 99.4% on average this spring (Ires MLS). In Boulder County, for that same time period, homes sold at 108.9% of list price compared to 97.8%. Gilpin County is seeing the biggest drop with homes selling at 107.6% last year to 84% of list price this April. That means a home for sale listed at $550,000 last April in Gilpin might have sold for $591,800 while this year it may sell at $462,000.

While price declines vary region to region, and house to house, prices have come down from last year both locally and across the country. Ultimately, price drops would need to be much more significant to begin to affect affordability particularly for first time home buyers. As new homeowners consider purchasing there is a rise in creative financing options and specifically joint real estate purchases.

A recent Zillow survey stated, “18% of successful home buyers purchased with a friend or relative who wasn’t a spouse or partner. This trend is expected to continue in 2023 and beyond.” By co-purchasing first time home buyers can improve their debt-to-income ratio, down payment, and overall purchasing power allowing them to qualify for more money.

For active buyers, less competition allows them to submit offers below list price, which is a boon, especially if rates have pushed them to the top of their budget. But on the flip side many homeowners interested in selling are not risking it, leaving us with continued record low inventory, which is predicted to continue.

We have seen some competitive situations however. If the home is in great shape, updated, and well maintained, multiple buyers put their best foot forward knowing they won’t have to immediately sink more money into the house after they move in. Now could be a great time to fix up your home in anticipation of selling in the next 6-12 months.

Emma Quarterman can be reached at 303-506-5218 or by email at emma@livewestrealty.com. Checkout her website at emmaskycolorado.com/.