Notes from the field (March 2024)

Turbulent rates, easing supply, prices on the rise

As we step into the spring selling season, the real estate market is finding its stride. There's pent-up demand for homes in our region and inventory is starting to pick up. Although many hoped for a surge in housing activity this year, it looks like we're in for a gradual return to 'normal' instead.

Mortgage rates were expected to fall throughout 2024, but they ticked up last month on better-than-expected economic news, which led to less optimism over near-term Fed cuts and, thus, lower mortgage rates. As of this writing, mortgage rates are hovering around 7%. Still, the consensus is that rates peaked last year and will be lower by year-end.

Supply and demand have taken a big hit due to higher rates. Most homeowners have no financial incentive to move given the price of homes and borrowing costs today.

Until we see a substantial increase in the number of homes for sale, there remains upward pressure on prices. As you can see above, prices started to climb after the new year and are likely to continue this trend for the next several months.

Inventory is finally improving. In Denver Metro, 25% more new listings hit the market in February than in 2023. If this trend continues or accelerates, we could return to pre-pandemic (2019--light green line) inventory levels, which would be a welcome change for all market participants.

Thanks for reading!