Northern Colorado Market Update - February 2023
Mortgage rates are now at 6.2%. We have felt a lot more buyers come back into the market since rates have fallen into that range. The number of new listings coming on the market right now is lower than it has ever been. However, the number of homes sitting on the market is 127% higher than last year.
The median price of a single-family home in Larimer County peaked at $617,000 in April of 2022. Since then the median price has fallen about 8%, down to $566,000. That is a big drop. However, because prices ran up so high so fast in the first 4 months of 2022, prices are still about 6% higher than they were at this time last year.
The price spike and subsequent correction were more subdued in Weld County. The median price peaked at $505,000 back in April and has now fallen to $450,000. Prices in Weld are now 2% lower than where they were last year. But sub-markets like Windsor tell a different story. Windsor’s median price fell about $20,000, peak to trough, but prices are still 20% higher than they were this time last year!
So we have gotten some price relief in some markets, but low inventory is a difficult market dynamic. It makes it very easy for prices to go up, and very difficult for them to come down.
We are encouraging our buyers to be patient and be prepared to search over a span of multiple months.
Longer searches have advantages. It helps buyers learn the market and builds their confidence so they know when the right one comes. We also find that it helps them understand how active the market is and gives them confidence in the stability and resiliency of prices. The process of viewing homes in person, and then seeing them go under contract a few days later at a certain price is a valuable learning experience.
Essentially they become market experts in the property type they’re considering. When buyers sit on the sidelines and read headlines, they can get analysis paralysis. But when they actively search and learn, they gain confidence.
A multi-month search process may seem time-consuming, but it’s time well spent. Many of our clients heavily utilize remote/video showings to weed out homes that won’t work before they make the commitment to go see them in person.
The incredibly low number of new listings is helping our sellers move well-priced properties without trouble. But pricing is critical. We are seeing a movement of home sellers pricing homes 3-5% below market. The result can be a surprisingly intense bidding war with intense showing activity in the first few days on market.
We are hoping to see inflation rates continue to fall this year so that interest rates drop into the 5% range. If this does happen, we expect a robust spring and summer selling season. It seems there is a lot of pent-up demand after potential buyers and sellers have been stumbling around, shell-shocked as they watched rates rise above 7%. But now that they’ve come down to the low 6’s, people are waking up and our phones are ringing again with folks exploring their options.
Thank you for taking the time to read this report. To all of our past, present and future clients, your trust means the world to us.
Grey Rock Realty
