Dare We Say It? A Return to Normalcy - Spring Real Estate Market Update

Dare We Say It? A Return to Normalcy - Spring Real Estate Market Update

  • Allison Benham
  • 04/25/23

Well, it's official! The first quarter is behind and us and spring is here! It was so refreshing to pull out the sandals this week and ditch the bulky sweaters and jackets!

Now that spring is in the air, we know it's usually time for real estate to heat up and this year is no exception. We just got numbers in from the first quarter. So what can the numbers tell us about this year's real estate market? Read on below for our take.

Interest Rate Update

The talk over the past 6-8 months has been all about interest rates as buyers are feeling the crunch to their affordability. However, interest rates appear to have turned the corner and are heading back down.

30 Year Fixed Rate Mortgage Average

While it's always a bit of a guessing game, the lenders we're speaking with tell us that when May's data comes out, it will likely show improvements in the fight against high inflation. That should serve to continue to drive down mortgage rates. By summer, we wouldn't be surprised to see mortgage rates in the 5.5% - 6% range.

Higher interest rates to this point have had their intended impact on the market. While demand is still solidly active, we are free of the frenzy of the past two years. It feels much more like a normal year where there is a greater sense of balance. Yes, there are still homes receiving multiple offers and yes, there are also still some homes sitting on the market and not moving as quickly. It's a mixed bag out there but we are seeing that listings that are prepared well for sale and priced competitively still have plenty of buyer activity and interest.

When we look back at the numbers, this feels and looks to be closer to what we experienced in 2019- pre-COVID, pre-work-from-home-induced-home buying-frenzy (whew).

So, what do the numbers show us?

The graph below shows Median Closed Price by county. While it's true that some of the median closed price numbers are negative year-over-year, what this graph really shows is we had a dip in quarters 3 & 4 of last year. Prices went down, and now they are on the way back up month-over-month. Could it be that the anticipated housing downturn actually already took place last winter? We did see about a 5-10% decrease in home prices during that time, very sluggish sales, and then right after the new year it has felt like it's off to the races again.

Median Closed Price by County- Click on the graph to enla

Boulder County Inventory Levels are heading toward more "normal" market conditions. March's active inventory is similar to 2019's, one of the more balanced years in the past decade.

Months of inventory is up to 1.9 months in Boulder County signaling some seller advantage, but a far cry from the absurd levels of .6 months last year. Last year it felt like inventory was already tight due to COVID related dynamics and then of course after the Marshall fire, inventory tightened up even more.

Interesting note this quarter: inventory numbers are lower as you head further south down into the Denver metro. Arvada, Westminster, and Broomfield all show lower inventory than up north in the Boulder County communities.

Months Supply of Homes for Sale by County

Home buyers are quick to offer again. Average Days on Market is down to 11. This isn't quite as fast as the four days-on-market average of the pandemic-induced frenzy of the past two years, but enough to generate a fair number of multiple offer situations. In the fall/winter of last year, we saw days on market peak as high as 41 days.

Median Days in MLS by County

Showings per listing match the more balanced activity levels of 2019. Showings per listing were at 7.8

Showings per Listing by County

So far, the numbers show us a varied spring market where some homes fly off the market with multiple offers and sell over list price and others linger for longer and have to take a price cut to sell.

One thing is clear- many buyers have not been deterred by higher interest rates and are deciding to move forward with a plan to refinance later when rates come down.

As we move into summer, it may be that we see those rate decreases. And if/when that happens, will another wave of buyers hit the streets searching for homes? Time will tell! We'll be sure to keep you posted on what plays out!

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