July 8, 2022 | SchwingState's hottest take on Denver Metro's shifting real estate market and smart tips for buyers and sellers for Summer 2022.
Many of us will immediately recognize Heatwave's "Too Hot to Handle" released way back in June 1976. To me, this iconic album cover perfectly signifies both the state — and mood — of the real estate market today.
Yes, the market is shifting and in flux. No, the bottom is not dropping on home values anytime soon. Understandably, people are confused, exhausted, and unsure which direction to go.
The latest numbers are now in for the first six months of 2022. Here are the three most important market indicators I see today, along with cool tips for buyers and must-knows for sellers, a three-minute read.
Defining Market Indicators
This time in 2021, the Denver Metro area ended June with only 3,122 homes for sale. Year-over-year, inventory doubled with 6,057 homes now for sale.
Months-of-inventory (MOI) is now at 1.19. This is the first time inventory has been 1+ month since June 2020. In February and March this year, inventory was so scarce it was being measured in DAYS.
While these numbers present a significant supply increase in a short amount of time that will be widely felt in the market, perspective is required. Inventory is still 5% less than it was in 2020, 36% less than 2019, and 80% less than what's needed for a balanced market (which requires 6 months of inventory).
Cool Tips for BUYERS
It’s prime time for qualified/approved Buyers to make competitive offers on desirable homes, retain buyer-protective terms in their purchase contract, get an offer accepted quickly, and start building equity now.
More than ever buyers are wise to engage with a dedicated, savvy, professional lender who understands buyers needs and offers programs to navigate shifting financial waters. New tools are available.
A recession will likely come in 2023. When it does, rates are likely to go down. This will put additional pressure on already restricted supply which will cause home prices to go up. The result will be more equity for those who already own, and additional years of sunk-costs for those still renting.
A quick exercise ... Do the math on what just a year of rent adds up to right now. Determine what percentage of your total annual income is going to grow someone else's retirement assets. Ask yourself, how long is too long to be paying off someone else's mortgage instead of your own?
One Must-Know for SELLERS
The appetite for bidding wars is O-V-E-R. Smart Sellers who want to make a move this summer will read the room, ditch the ego, get educated, be realistic, price with absolute precision, market professionally, and take novel and strategic steps to both attract and contract with the most serious and qualified buyer early. Yes, I can absolutely help you do that.
A word of caution ... Unrealistic sellers should be prepared to be bit hard and bit quickly by a tired and weary market, and are better off sitting on the sidelines for now.
The sky isn't falling but Buyers and Sellers alike — just like the global economy — are currently riding a shockwave and emotions are running high. Two parting thoughts you can take to the bank:
People are predictable. The knee-jerk reaction for most people during this phase will be hesitation, indecision, and "stuck-ness" despite smart moves and fantastic opportunities available this summer.
Emotions are a very powerful force — even if they're not the best guide. I am confident that amazing deals will be seized by educated and prepared individuals who are emotionally ready to steer their destiny onto favorable shores ahead.
If you are or know someone who is in that boat, engaging the right professional partners today to ask questions and get reliable information is a great place to start. Be in touch. I'd love to help, now or in the future.
Until next time, TGIF, Happy Friday, and stay cool this HEATWAVE weekend.
Michelle Schwinghammer is a REALTOR®, Certified Negotiation Expert® and Certified Pricing Strategy Advisor® who helps people move forward in Colorado. She currently serves as the West District Director for the Denver Metro Association of REALTORS and is proud to serve as a leader on its Community Alliance Committee.
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