Has the Seasonal Cooldown Returned?
Based on the showing traffic, there has been a marked decline in the demand for homes since spring. As we officially move into fall, the housing market continues to cool off. That may not sound like a good thing, but it indicates that the market is continuing to cool down gradually, which is typical for this time of year. Median home prices were down around 0.5% at the end of August, coming in at $535K. That half-a-percent decline is a good sign that the slowdown we historically see in fall and winter is happening, unlike the chaos in the market this time last year. Home price appreciation should slow sharply in the months ahead. However, we see this trend as stable and healthy – no need to sound the alarm bells!
Speaking of alarm bells…
As usual in our seller’s market, some are worried that we will see an excess of distressed home sales as we did back in 2010 after the Great Recession. We don’t see that as likely. According to DMAR (Denver Metro Association of Realtors), in August 2010 the Denver Metro saw 941 distressed home sales, which represented 32.3% of sales that month. In August 2021 there were only seven distressed home sales, which represented only 0.18% of sales. As moratoriums on evictions expire, some rental properties may become distressed, but according to DMAR this should not amount to a flood of distressed home sales like we saw in 2010.
The main reason we are not concerned is that in August “tappable equity” (the amount available to borrow against while still maintaining at least 20% equity in their homes) in homeowners’ properties reached a record high. With so much equity on the table, the odds of ending up with a distressed home sale are very low. Most people who cannot afford their mortgage payments would be able to tap into that equity and simply sell their homes the normal way, thus bailing them out of any serious financial strain due to their mortgage payments.
Another common concern we continue to hear from buyers is that they don’t want to buy at the height of home prices, so they plan to wait for them to go down. Like above, this scenario is not likely to happen. Home prices in the Denver Metro have gone up 45 out of the past 47 years! Based on the available data, it’s not likely that this trend will suddenly reverse, and homes will become dramatically less expensive.
It’s still a great time to make your move!
Whether you are a buyer or a seller, it can still be the perfect time for you to make a move. Please don’t hesitate to reach out – each person’s circumstance is unique and I would love to support you in achieving your real estate goals!