After a half year of declining sales in the wake of sharply higher mortgage rates, the National Association of Realtors is seeing an upward turn in pending home sales — and Denver area brokers are already marking that same bounce.
“It’s been crazy the last month,” said Rike Palese, broker/manager of ReMax Professionals’ DTC office at I-25 and Dry Creek Road. “In many neighborhoods, the market has shifted back to a very aggressive market.”
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Palese is one of a number of agents from different companies around the area who began tracking rising sales back in December.
Friday, NAR released its monthly Pending Home Sales Index, posting a 2.5% increase in signed residential contracts during December — the first positive return on the index since May of last year.
“This recent low point in home sales activity is likely over,” NAR Chief Economist Lawrence Yun said, in commenting on the national report.
“Mortgage rates,” added Yun, “are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”
National rates for 30-year fixed-rate loans dropped more than a point over the past three months, after topping out in the mid-7% range.
In addition to better loan rates, low inventories in the Denver area were also pushing buyers to get more aggressive, agents said. Monthly stats by the Denver Metro Association of Realtors showed just 4,757 properties available for sale in all of the eleven-county metro area at the first of the year, down from 6,253 in late November.
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“We’re seeing lots of activity in central Denver, Cherry Creek North, Hilltop, Crestmoor, and Country Club,” Palese said, noting that activity was also evident in suburban Lone Tree and Highlands Ranch — where supplies of homes are noticeably trailing demand .
Stats for January haven’t been released, but brokers said weekly reports are already clear about the direction.
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“Pending sales have increased every week,” said Deviree Vallejo with LIV Sotheby’s International, who with her team partner Liz Richards did around $100 million in sales last year. The vast majority of it during the first six months of 2022.
“August to December was a tough market,” Vallejo said, noting that many properties ended up being yanked from the market during fall after failing to stir activity.
Now Vallejo said she is seeing repeated examples of the same properties being returned to the market — where they’re drawing many showings and are going under contract within a few weeks. That’s pointedly true at the luxury end of the market, where out-of-state buyers are once again evident, paying cash for well-priced properties, she said.
“Californians aren’t stunned by Denver’s prices, and they have money to spend,” said Vallejo.
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ReMax’s Palese says he was surprised last week after he put up a “coming soon” notice on a main floor, master suite home in Wildcat Ridge, just south of Highlands Ranch, only to see a sight-unseen offer arrive. That’s something he hadn’t experienced since last spring.
“Lone Tree and Highlands Ranch are both very undersupplied,” Palese said. Meanwhile, last weekend in Denver’s Park Hill area, one of his clients had to pay around $5,000 over list price to buy a home that had failed to sell when it first came on the market last fall.
Both agents noted the turnaround is not a sign that sellers can be as aggressive on pricing as they were a year ago, when the market was hitting its peak. At the start of the new year, the median closed-priced Denver single-family home was at $600,000, according to the Denver association, off by some $60,000 from the median price last April.
“Certain sellers still aren’t pricing correctly and they are having to make reductions,” Palese said.
On his rapid sale last week south of Highlands Ranch, the sale price of $1.179 million was still a bit lower than for a roughly comparable house, better updated, that he sold across the street last spring at $1.3 million.
However, “if it’s a desirable neighborhood and priced well it’s going to go under (contract) relatively quickly,” LIV Sotheby’s Vallejo said. “Buyers realize that rates won’t be in the threes anytime soon. And you have a new set of people looking for homes who have nothing to compare it to. Their new normal is 6%.”
