The 2023 Real Estate Market
Another year! What happened with the market in 2023? What is the outlook for 2024? My friends, family, and clients are constantly asking me this right now.
First, we’ll look back and compare 2023 to 2022. New listings at the end of the year are down compared to last December, but pending listings and active listings are up. 5% more sellers stuck it out through the holidays to try to sell, and it worked with nearly 11% more listings under contract this December compared to last. Sales volume is also down this December compared to last. 18% fewer homes closed overall in the market compared to 2022.
The average and median close prices decreased slightly by the end of the year, more in line with 2021, and not the craze of late 2022. You can see prices have been on a steady incline over time in the Denver Metro, but everything changed and increased at a much higher rate in 2021.
Average days in the MLS skyrocketed compared to 2021, but are much more in line with previous years. We ended 2023 with approximately 45 days on market. Sellers should always expect to list their homes longer at the end of the year and for everything to sell more quickly in the summer.
I always love to look at this chart to remind myself of the resiliency of the market and that the 2008 market crash was rare and not repeatable in the same way. Thankfully we do not have the same inventory issue of 2021 and are much more in line with previous years.
Ok, so all this being said, where does that leave us at the start of 2024? It’s all a lot of predictions by economists at this point. In 2024, mortgage rates will likely land between 6 and 7 %. Every time mortgage rates drop by 1%, 5 million more buyers enter the market. While rates are dropping, competition grows.
Currently, market experts believe the Fed will drop rates again in March. That is, of course, yet to be determined. There is pent-up demand from rising rates and continued low inventory, so the market could pick up sooner and hotter than in previous years.
For homeownership to be attainable for the average American, mortgage rates need to drop back to or below 5.5%, wages need to increase, or a combination of these factors. In the Denver Metro area, the qualifying income to purchase a single-family home is $140,000 and the average Denver buyer needs rates below 6.5%. So why will 2024 be a better year for buyers?
Mostly, rates decreasing. This will increase inventory on the seller side and also increase the buyer pool. There will be more listings to choose from and more opportunities with more affordability.
Let’s get ready for an amazing 2024! Reach out if I can support you in any way with your home goals, whether it’s on your 2024 goal list or further out.
