With a full first quarter behind us, we’re seeing improvements over last year, one of the slowest moving real estate markets in years. And, as always, we'll take a look at where the market’s been, where it’s at, and where it appears to be headed for the rest of 2024.

Where We’re At | Local Housing Market (Denver & The Front Range)

Local Market Insights: Easter Seasonality and Inventory Trends

As Easter approached, a predictable softening in buyer engagement was observed, mirroring patterns from previous years. With families opting to spend time together, showings dipped slightly, impacting the number of homes going under contract. This seasonal adjustment serves as a reminder of the importance of aligning strategies with the natural ebb and flow of buyer behavior.

Inventory Insights: Expanding Choices

On a positive note, the landscape of available listings is widening, providing an influx of options for eager buyers awaiting their perfect match in the market. This expansion signals a healthier market environment that caters to diverse preferences and needs. Both new listings and pending transactions have seen adjustments, reflecting a delicate balance between homes entering the market and those securing contracts. Navigating these shifting tides effectively requires staying agile and well-informed.

Market Momentum: Showings and Sales Trends

Despite a decrease in showings, the quality of buyer interest remained notably high, with those venturing out during the holiday period demonstrating a genuine intent to purchase. This emphasizes the importance of prioritizing engagement quality over sheer quantity. Strategic pricing of listings continues to be pivotal, influencing the speed at which homes are snapped up and the adjustments sellers are willing to make to attract the right buyer.

Key Market Metrics:

• Median Close Price: $595,000, marking a 3.5% increase month-over-month.
• Supply in Months: 1.67, down by 13/0.47 month-over-month.
• Median Days in MLS: 11 days, down by 52% month-over-month.
• Pending Sales: Up nearly 32% month-over-month.
• New Listings: Up over 16% month-over-month.
• Total Showings: 13,378, showing a slight decline of 12.1% week-over-week.

However, it's important to note that achieving market balance, typically indicated by a six-month supply, would require a significant increase in total listings. This suggests that the market is currently operating below the desired level.

Additionally, according to a recent study by Corelogic, Denver ranked in the top 10 (#9) for home price changes in February, experiencing a 3.2% increase compared to 2023. Miami saw the highest gain at 10.2% year over year, highlighting dynamic shifts in housing markets across different regions.

Where We’ve Been | National Housing

Home prices nationwide, including distressed sales, increased year over year by 5.5% in February 2024 compared with February 2023. Chief Economist for CoreLogic, Dr. Selma Hepp, said:

“Home price growth pivoted in February, as the impact of the January 2023 Home Price Index bottom finally faded. As a result, the U.S. should begin to see slowing annual home price gains moving forward. Nevertheless, with a 0.7% increase from January to February 2024, which is almost double the monthly increase recorded before the pandemic, spring home price gains are already off to a strong start despite continued mortgage rate volatility. That said, more inventory finally coming to market will likely translate to more options for buyers and fewer bidding wars, which typically keeps outsized price growth in check. Still, despite affordability challenges, homebuyer demand appears to favor already expensive, coastal markets with a limited availability of properties for sale.” 

Where We’re Headed | Spring Housing Market Forecast

Altos data shows we only need stability in mortgage rates for a rebound in home sales. You may know that home sales have been slowish for the past 18 months or so. As mortgage rates began rising starting in 2022, payment affordability got dramatically worse and homebuyer demand slowed. At the same time, seller volume dried up.

But now sellers are coming back into the market. New listing volume last week was 18% more than a year ago. Total available inventory is gradually climbing about 1% per week — last year it was still declining in April. As we roll into the second quarter, we should have accelerating inventory growth each week.

The Economy’s Impact on the National Real Estate Market

In a recent assessment of the job market and its implications for the real estate sector, Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), offers valuable insights into the current economic landscape and its potential impact on housing trends:

"The job market continues to exhibit solid strength, with 303,000 net payroll job additions in March. That brings total job creation to 5.8 million from the pre-COVID peak four years ago. The construction industry added 39,000 net new jobs, up by 600,000 from four years ago. Therefore, more housing supply is on the way in future months.

More jobs mean more potential housing demand in the future. But more jobs also mean the interest rate decline could stall as the Federal Reserve re-evaluates inflation risk. Wage growth was 4.1% in March after two straight years of above 5% gains. This decelerating wage growth can lessen consumer price inflation.

Overall, mortgage rates are likely to remain unchanged, with no further measurable declines in upcoming months. High budget deficits will also hinder interest rates from falling as government borrowing crowds out mortgage funding availability. Even so, multiple offers on properties are still happening.

Homeowners with record-high housing wealth should understand the current favorable environment for putting homes on the market." Economist

Who’s Buying? | Millennials Take the Lead in Home Buying

The housing market is experiencing a significant shift in demographics, with millennials emerging as the largest group of home buyers, according to the latest report from the National Association of Realtors® (NAR).

The 2024 Home Buyers and Sellers Generational Trends report reveals that millennials, spanning both younger (ages 25 to 33) and older (ages 34 to 43) segments, now constitute a combined 38% of the home buying market, up from 28% last year. In contrast, baby boomers' share has decreased from 39% to 31%, relinquishing their position as the largest demographic of home buyers.

Dr. Jessica Lautz, NAR deputy chief economist, attributes this shift to younger millennials entering homeownership for the first time and older millennials transitioning to larger homes to accommodate their changing needs.

The report also highlights a rise in first-time buyers across generations, with younger millennials leading the charge. Additionally, the emergence of Generation Z (ages 18-24) in the housing market demonstrates diversity and independence, with a notable proportion of single female purchasers.

Despite these changing buyer trends, baby boomers remain the largest home-selling generation, accounting for 45% of all sellers in 2023. The report also reveals variations in homeownership tenure among different generations, with older millennials typically selling their homes after just six years, compared to Gen X, baby boomers, and the Silent Generation, who typically stay in their homes for 15 years.

The enduring appeal of homeownership is evident, with 82% of all buyers considering it a good financial investment, particularly younger millennials, 86% of whom share this positive outlook. Regardless of generation, the report indicates that buyers and sellers alike value the expertise and guidance provided by real estate agents, highlighting the essential role they play in realizing homeownership dreams.

NAR President Kevin Sears emphasizes the universal value of owning a home, serving as a cornerstone for personal prosperity and community development. As market dynamics evolve, the reliance on real estate agents for expertise and guidance remains steadfast, underscoring the invaluable service they provide in facilitating homeownership.

Bottom Line

The local housing market on the Denver & Front Range experienced seasonal fluctuations as Easter approached, with a slight dip in buyer engagement. However, this was coupled with a positive expansion in inventory, offering more choices for buyers. Despite a decrease in showings, the quality of buyer interest remained high, emphasizing the importance of focusing on engagement quality over quantity. Key market metrics show promising trends, including a median close price increase and a significant uptick in pending sales and new listings. And now it’s also clear just exactly who is buying up the new inventory in 2024.