Buyers, and sellers for that matter, have been adjusting to high-interest rates as they navigated...
Fall Real Estate Market Update for Central Denver – Challenges and Opportunities
As the cooler months approach and children settle back into their school routines, we're seeing the real estate market in Central Denver slow down, which is typical for this time of year. However, this year's slowdown comes with some unique challenges for sellers, making it essential to understand current trends to navigate the market effectively and get the most ROI on your home investment.
Inventory is on the Rise
One of the most notable changes in the market is the increase in available homes. The inventory of Central Denver homes for sale is higher than in previous years, reaching levels we haven't seen since August 2013. This increase means more competition for sellers, making it crucial to stand out to attract buyers, especially the first weekend on market.
Contracts Are Falling Apart More Often, But Can Be Avoided
We're witnessing an unusually high fallout rate of contracts. About 35% of properties that go under contract are being terminated and returned to the market as active listings. For context, this is significantly higher than the fallout rate of 15% observed between 2013 and 2019 and the 9-10% rate seen during the pandemic years of 2020 to mid-2022.
So, what’s causing these contracts to fall apart?
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Inspection Issues: The most common reason is at the inspection stage. Buyers and sellers often can’t agree on repairs, or buyers decide they don't want to handle the repairs themselves. Sellers can prevent this issue by opting for a pre-inspection before listing, which helps identify and address potential problems prior to listing the home.
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Loan Availability Problems: Many transactions are also falling apart due to loan availability issues, sometimes just days before closing. It's vital for buyers to stay in close contact with their lenders and ensure all loan requirements are met well before the closing date. Listing agent communications with the buyer's agent are also key to stay in sync and navigate any issues before they arise.
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Rising Homeowner’s Insurance Premiums: Colorado’s classification as a high-hazard state has led to a significant increase in homeowner’s insurance premiums. Buyers should prioritize this deadline in the contract to avoid surprises, particularly in the foothills communities, where the impact has been more severe.
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CIC Document or Status Letter Issues: For attached properties, we're seeing terminations occur around the CIC document or status letter deadline. Many condo complexes have had to increase their insurance coverage, which leads to higher HOA dues or special assessments. Sellers should be aware of any changes in their HOA fees and communicate this with potential buyers to avoid surprises.
What This Means for You
For sellers, the opportunity lies in some pretty simple preparation before listing your home. Proactively addressing potential hurdles, such as inspection issues, will reduce the chances of your property falling out of contract. Presenting your home in its best light from day one is key to attracting and impressing today’s discerning buyers. Generating strong interest in the first week on the market helps create the demand needed to achieve the highest return on your home. Homes that sit on the market too long tend to blend in with the remaining inventory, which makes it harder to get top dollar. By positioning your home effectively and addressing concerns upfront, you'll be well-positioned to attract serious buyers, especially as we approach the end of the year. Plus, buyers out shopping in the fall, especially once the snow falls, are generally not just out window shopping- they're motivated by some driving factor to find a new home.
For buyers, now is an ideal time to explore the market, with more available listings offering a wider range of options than we've seen in recent years. This increased selection gives you a bit more room to negotiate and to take your time in finding the right fit. Plus, with optimism from the latest fed meetings, it feels like rates are headed in the right direction which will supercharge your purchasing power.
September Market Report >> CLICK HERE
September Buyer Tips
If you're obtaining financing, it's important to focus on a price range that aligns with a comfortable monthly mortgage payment. With rates trending downward, you may have been quoted around 7% if you spoke with a lender 3 to 12 months ago. As rates have fluctuated, you might now find an opportunity to increase your purchase price while maintaining a manageable monthly payment—or you can stick with your original price range and enjoy added savings each month. If you'd like a referral to a great lender or two, let me know. I've even seen some quoted in the high 5%'s.
September Seller Tips
As we move into the fall market, it's essential for sellers to be proactive in preparing their homes for sale. With buyers showing a strong preference for move-in-ready properties, addressing any necessary repairs or updates before listing can make a big difference. Presenting your home in its best light will attract more interest and help it stand out in a market with rising inventory. A fresh coat of paint, clean windows and walkways, plus staging can also make a huge impact. Consider a pre-listing inspection to identify potential issues that might deter buyers, and price your home competitively to draw in serious offers.
If you're in the market to buy/sell a home or know someone who is, let’s connect! I'm happy to share market resources, vendor referrals, or anything else that would be helpful in your journey.
Michelle Fitzgerald
Real Estate Broker, Realtor®
phone: 970.215.8455
email: michelle@michellesellsdenver.com
Instagram: https://www.instagram.com/michelle_sellsdenver/