Mar 2, 2024 - News

Why the Denver housing market won't be cheaper this spring

Median home sales price in the Denver metro area
Data: Redfin; Chart: Alice Feng and Jared Whalen/Visuals

Lower mortgage rates won't make buying a home much easier or cheaper, Axios' Emily Peck reports.

Why it matters: Steep borrowing costs are just one piece of the housing affordability crisis.

Zoom in: Lower mortgage rates could push up home prices in Denver and nationwide if demand surges and inventory remains tight.

What they're saying: "Lower interest rates will unlock the golden handcuffs that have kept many sellers from selling over the last two years," Denver agent David Schlichter tells Axios.

  • More homes will hit the market, but more buyers will flock to it, driving prices back up.
  • "The lower interest rates get, the more competitive the market will be," Schlichter says.

State of play: 30-year mortgage rates are down from 20-year highs, but have crossed 7% again.

Flashback: In 2021, when rates hovered below 3.5%, bidding wars were rampant and home prices surged by double-digit percentages.

  • Historically, home prices are elevated in spring and summer when more buyers are out bidding.

The fine print: Despite cooling from 2022 highs — peaking around $615,000 — Denver median home prices are still higher than they were pre-pandemic.

  • The Denver-area median sales price was up roughly 32% from December 2019 to December 2023.

Reality check: Mortgage rates aren't guaranteed to fall. But if they do and curbing inflation is the primary motivation, home values and competition likely won't cool, Matt Graham of Mortgage News Daily says.

The other side: "If the drop involves disinflation and early signs of an economic recession, there would be more relative relief for those left in the market when it comes to affordability and competition," Graham tells Axios.

The bottom line: Many potential homebuyers still can't catch a break.

Go deeper: America's housing affordability crisis makes a comeback

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