There’s no denying that the housing market has slowed down. Nationwide, the number of homes sold through the end of the summer dipped by 20% in a year-over-year comparison compiled by the National Association of REALTORS® (NAR). Colorado is seeing a similar trend, but remember, the decrease in year-over-year sales volume is a lot less scary when comparing the number of homes sold so far this year to that of the pre-pandemic era. Comparing the average sales volume of single-family homes in the Denver Metro area in 2022 to that of 2013–2021, we’re not that far behind.

This change in pace is the result of a return to seasonal buying and selling patterns. Typically, real estate activity slows as the temperatures drop. This is due to more people putting their real estate plans on hold over the holiday season or just simply not wanting to move in the snow. During the days of the COVID-19 pandemic, the seasonal shrink in sales was less than normal, but now, the market is making its way back toward what can be considered “normal” trends — which illustrates the strength of the market now and in the future.

The impact of the changing market is also dependent on geography and which price points are being examined. The luxury sector of the market is proving to be somewhat more resistant to economic volatility — maintaining a mostly positive incline in the number of homes sold through the first half of 2022. Conversely, all price points have seen fewer homes sold while the average sale price of those homes continues to appreciate.

As Colorado’s real estate market eases off the gas, the market inches its way towards a state of a more even playing field in which buyers and sellers can accomplish their goals.

This year, the balancing forces of inflation and rising interest rates are at work to help cool the once red-hot real estate market and give consumers another chance to buy or sell a home.

The current hike in inflation is the result of lingering supply chain problems — driven by COVID-19 — that have trickled all the way down to real estate. This, paired with the economic boost provided to Americans via the stimulus check program, exerted upward pressure on prices in general.

To combat the threat of rising inflation, the Federal Reserve has increased the interest rate for mortgages in hopes that it will slow the real estate market — which it has. Luckily for those who have been seriously discouraged by price increases in the real estate market and beyond, there are reasons to believe that this inflationary period will soon come to an end. “Much of the increase in price can be attributed to shortages of goods that are likely to ease as companies figure out how to produce and transport what people want to buy in a pandemic-altered economy,” said a recent article from Forbes.

Here in Colorado, and across the nation, consumers are feeling the effects of the rising mortgage interest rates. Fewer homes are being sold and the price of those homes continues to increase, but according to Lawrence Yun, this period will not last forever. “Home prices are still rising by double-digit percentages year-over-year, but annual price appreciation should moderate to the typical rate of 5% by the end of this year and into 2023. With mortgage rates expected to stabilize near 6% alongside steady job creation, home sales should start to rise by early next year.”

In fact, according to data from J.P. Morgan’s 2022 Home Price Analysis comparing 116 U.S. metropolitan areas, Denver Metro home values are expected to hold steady throughout the next two years. The stabilization of the market is fantastic news for buyers who are searching for homes now, or may be in the near future, and wonderful news for sellers who are hoping to sell their home for a good price.

All in all, the Denver Metro real estate market, and the other communities spanning Colorado’s Front Range are well positioned to offer their consumers bountiful real estate opportunities.

While the market is still tilted in the sellers’ favor, the days of getting 20+ offers, selling exponentially higher than the asking price, and waiving contingencies are for the most part behind us. A year ago, submitting an offer above asking price was the only way to ensure your offer was even considered. Today, making an offer at asking price or even below is reasonable. Buyers, listen up!

Although buying power has somewhat diminished, buyers gained the opportunity to ask for inspections and appraisals, and now have the breathing room to make a competitive offer without the added pressure of 2021-esque competition. Knowing that home prices are slated to settle in the coming years, now is a great time to invest in your home. Plus, refinancing is always an option down the road to adjust your rate once they return to a more palatable level.

Sellers, don’t be discouraged by the slowed pace of play — this is still a sellers’ market. Home prices have increased over the past few years, which directly translates to more money in your pocket. But think strategically about how to sell your home. Looking at historical data, it’s proven that there are fewer homes on the market during the fall and winter seasons. This lack of inventory makes those homes that are active on the market stand out. Consider listing your home sooner rather than later to avoid an overly saturated market that distracts buyers from your property.

There is a lot to digest in terms of changes in today’s real estate market, but these shifts are a sign of a growing economy and good things to come. Strengthening and stabilizing home prices is a reminder that investing in real estate is an excellent way to shield your money from inflation. The market is still favoring sellers, creating opportunities to grow your wealth through strategic buying and selling, all while slower market conditions and a gradually rising inventory are giving buyers more options to choose from and providing more negotiating power.

The bottom line is this market is not the beast it’s been made out to be. With the guidance of a skilled real estate professional who has been through various ups and downs of the housing market, you can reach your lifestyle, financial, and real estate goals.