Denver Real Estate is *Fall*ing, Not Falling

Be aware: There is a season (turn, turn, turn) that spurs fluctuations in the housing market

For years, we’ve heard stories about bidding wars for homes in the hot Denver real estate market. However, for the last few years there has been a noticeable seasonal slowdown and shift in the Denver area real estate market. It starts between the end of May and July, leading to a much different second half of the year than we experience in the first. August typically transitions into a much less chaotic market in the fall.


We can make educated guesses. Buyers are worn out from the spring craziness, or we decide to enjoy our wonderful Colorado summers. Seasonal swings in the real estate market are real and they seem to be increasingly larger swings each of the last few years.

Swing away!

There are still bidding wars but they are less frequent and typically involve fewer buyers. A home that might have received a dozen offers in the spring may only receive a few this time of year. Average time on the market tends to increase, and that is normal. Luxury real estate typically starts to see some price reductions and longer times on market. Whether you are a buyer or a seller, it is important that you understand what is happening in the Denver real estate market and how to benefit based on market information and knowledge.

Is this the bubble?


As a buyer you want that to be the case, but the housing inventory in the Denver metro area is actually just a bit lower this year than it was at the same time last year. According to the Denver MLS, total active listings was 8,018 in August 2016 and 7,619 in August of this year, or an almost 5 percent drop (seven Denver are counties). Companies are still hiring and moving good paying professional jobs here and all indications are that trend will continue for a while. There are always social and economic factors that can change, but worrying too much about the maybes could cost you more in the long run. If you wait for a drop of 10 percent in Denver but it comes after prices rise another 15 percent or more you are in worse shape financially. Buy based on your life needs for the long term, not to try to turn a quick profit.

Are you a day trader?

You probably don’t day trade to make money and most people who try that lose. Although a home is not exactly an investment, it does share investment-like qualities. Trying to time the real estate market is about as easy as doing it with the stock market. The best way to benefit financially is to buy for the long-term. Find a home that you can live in and enjoy for as many years as possible, in a good area, with features that are desirable in any market, continue to pay down the mortgage and then, long-term you are most likely to be successful. Buying to make a profit is a different real estate analysis than purchasing a place to live and trying to build long-term value. Don’t let fear, misunderstanding and perception guide your decisions.

It’s in your head.

The most difficult part of this real estate market is the tendency for people to rely on their emotions to make decisions. Real estate involves a lot of money and it is emotional for very understandable reasons. Between the reports from the media and talk between friends of houses selling in a couple of days, the perception is that everything sells that quickly. That is not reality, as it is dependent on price, area, condition, listing price of the home and, yes, the time of the year. So when a home is available for more than a few days, buyers hesitate and ask, “What is wrong with it?” instead of asking if it is an opportunity. Sometimes there is something wrong, but a close look at the data shows that conditions are similar to last year at this time and any slowdown is seasonal and likely to be short lived.

So rejoice buyers, and if you can find a home you like, do your due diligence. This may be your opportunity to avoid a bidding war, waive inspections, waive appraisals or any one of a number of risky offer components that are typical in the hot spring season, so don’t let hesitation cost you.

He who hesitates is lost!

I listed a home prior to Thanksgiving a couple years ago in a great neighborhood on an updated, large lot. The market was also a little slower because of the holidays, but we had fairly good showing activity, good feedback, people saying they were interested, but had to think about it. They hesitated because the homes available had been on the market a little longer recently. My sellers had a home they were interested in purchasing so we lowered the price $10,000 in December on their home to try to spark an offer. When there was still no offer, they asked if we should take it off the market. My answer was no. I told them what I saw in the market and asked them to wait until after the holidays. Just after Christmas we received an offer that turned into four offers and we ended with a bidding war and back up at full price after more than 45 days on the market. This kind of thing happens more and more as buyers hesitate, assuming maybe there is a bubble and not paying attention to the data and numbers. If someone made an offer in December, they probably could have purchased the home for 15,000+ less than our final sales price. The hesitation cost a lot of money.

The moral is you should always be cautious, but don’t let your perception cost you a potential opportunity. Bidding wars actually tend to feed a buyer’s need to win and are more likely to end up in a mistake or regrets. Fall can be a great time to buy, so do your research and get the help of an experienced professional who can give you a good price based on comparable sales, a great analysis on the long-term area value and identify potential risks. A great agent will be the first one to tell you to walk, but is also there to be the non-emotional expert to guide you.

Just the way it is.

So remember that longer times on market and some price drops don’t necessarily mean the market is falling – it’s just *Fall*ing.

Categories: Real Estate