Will Rising Interest Rates Impact the Denver Real Estate Market?

For many years, the Denver real estate market has been desirable due to the fantastic balance between vibrant city life and natural mountain scenery. Denver is one of the few places where you can go shopping at the exclusive and premier Cherry Creek Shopping Center one day and then hit the slopes for exhilarating experiences at one of the many nearby ski resorts.

With incredible interest in the Denver market, many speculated that the average housing price would reach $1 million by Memorial Day after seeing the average rise to an incredible $918,850 earlier this year. Instead, interest rates started to rise, which affected the Denver real estate market in more ways than one. Read on to discover how the rising interest rates impact the Denver real estate market and what this means for buyers, sellers, and real estate investors.

Before interest rates rose, the Denver real estate market was extremely strong and competitive. With the market fueled by home buyers' desire for a home that offers all the outdoor perks that only Denver can provide, home prices rose quickly, and homes were selling as soon as they were listed. However, when interest rates rose from a mere 2.8% to a staggering 5.9% for a 30-year mortgage, it caused many home buyers to take a step back. Many started wondering how best to proceed with rising interest rates. The rising inflation is also causing many to reevaluate their purchasing and see how the economy turns before making significant financial decisions.

With this dramatic slowdown, there are signs that Denver is becoming more buyer-friendly in that homes are staying on the market longer, and home prices are declining. There has been a significant increase in single-family and multi-family homes being listed on the market over the past few months. Specifically, there was a 96.2% increase for single-family homes and a 45.2% increase for downtown Denver condos being listed since last year.

Home prices have decreased for single-family homes and multi-family condos. Compared to the beginning of 2022, homes stay on the market longer. If this trend continues, the real estate market in Denver could become a balanced or even a buyer’s market over the next few months or years. However, it is also possible that Denver is simply cooling down from the strongly competitive market it was in years before quickly bouncing back to a strong seller’s market.

Despite the slowdown of the real estate market in Denver, homes are likely to keep appreciating. For the rest of 2022, Denver homes will keep appreciating at a rate of 8% before dropping to nearly 5% in 2023. With strong appreciation rates expected, the Denver real estate market is still an excellent investment for buyers and sellers. However, thanks to the slight shift in the market, particular care and attention are needed for buyers and sellers on what they should do next.

Despite interest rates rising slightly, homes are staying on the market longer and home prices are declining, which makes it a great time to consider investing in a downtown Denver real estate property. However, home buyers must be prepared for the competition coming from Denver residents as well as out-of-state transplants looking to quickly invest in a piece of Denver real estate while the rates are manageable. Since out-of-state home buyers have more fuel from more expensive cities, they have been outbidding their local counterparts.

The location matters as well. Since there are many desirable neighborhoods in Denver, from affluent shopping oasis Cherry Creek to vibrant and artsy Downtown Denver, there is a lot to offer. Right now, it might be the perfect springboard for buyers to find their ideal home quickly while prices are low.

Buyers should also be aware that some neighborhoods, such as Washington Park, have one of the highest median housing prices in the area. Consult your downtown Denver real estate agent if you are interested in buying a home while prices are low. With the market in the buyer’s favor, you are more likely to receive more of your must-haves and contingencies than you would in the competitive seller’s market.

Since higher interest rates might deter many home buyers from purchasing now, sellers must find more innovative solutions for selling their single-family homes or multi-family downtown Denver condos. For example, sellers might consider offering to pay closing costs to help offset the rising interest rates. To ensure that you won’t sell your home for less than its market value, consider getting your Denver home appraised. A home appraisal can then be used to determine the fair market value of your home. You can use this information to determine a competitive price for your Denver home.

Other things you can do to increase the odds of selling quickly and for top dollar include getting a home inspection and staging your home. A home inspection can help alleviate many buyers' worries about the condition of your home. Staging your home can also improve the chances of selling your home for more than the asking price despite the current market. Finally, working with a Denver real estate agent who is an effective negotiator can help ensure you sell your beautiful Denver home promptly for top dollar. Though the market is in favor of the buyer, it is still possible for sellers to be able to capitalize on their investment by cultivating a strategic plan and working with a professional in the Denver real estate market.

Ready to take the next steps and either buy or sell a home in the Denver area? Reach out to trusted local agent Anne Dresser Kocur for guidance. Anne has over 30 years of experience in the Denver area and has broken records as the No. 1 agent in the Denver metro area. She and her team have the dedication, talent, and resources to help you find success in this market, whether you’re buying or selling. Reach out today to learn more.