2022 Local Real Estate Market Recap—What a Ride!
Posted by Lindsey Friedman on Friday, January 20th, 2023 at 11:00am.
Early 2020 through early 2022 saw two of the busiest and unsustainable years of real estate activity ever recorded in Colorado and the nation. All-time low mortgage rates, population migration, and lifestyle changes drove unprecedented real estate sales volume and home value appreciation.
On January 6th of 2022, the year opened with interest rates at a historic low of 3.22%. The floodgates of buyers were thrown open and as many of you may have heard from friends and family who were making a move, the market moved at a lightning pace with homes flying off the shelf at above list price—in fact in April of 2022, 78% of all properties sold for more than the seller’s asking price, the highest percentage on record.
My fellow realtor friends and I knew that this pace could not continue and with the confluence of rising inflation, threat of recession, the war in Ukraine, and challenged supply chains, buyers started to hibernate and the market made a shift. Showings declined and homes that were under contract in an average of 7 days on the market (DOM) in March of 2022 moved to over 64 days by year-end. Most notable on December 29th, a 30 year fixed mortgage rate had doubled to 6.42%— historically the largest jump in interest rates within a year. Emotions ran high for both buyers who decided to put their purchases on hold as well as Sellers who were astounded that their homes were sitting on the market more than a week.
2023 Forecast: A year of Opportunity for Both Buyers and Sellers
The double in interest rates defined our second half of 2022, but in November we started to see a subtle decline and as this continues through the new year, buyers will again begin to engage in the market. For this reason, Colorado real estate will be strong in 2023, most likely experiencing a 2–5% home appreciation in the first half of the year.
On the last day of 2022, David Stevens, Former Assistant Secretary of Housing advised, “This may be the one and only window for the next few years to get into a buyers’ market….and for Sellers, the Federal Reserve data shows that home prices only go up and always recover from recessions, no matter how mild or severe.”
History shows that homeownership is always the winning investment. For long-term homeowners, the coming years could be a unique buying opportunity. One constant is true: the population of people in the US in their homebuying years continues to far exceed the supply and this will ring true in 2023. Inventory of homes will be relatively low, fueled primarily by increased buyer demand again. New home starts were postponed at the end of 2022 also contributing to the inventory shortage.
The short of it: the newly balanced market will prove favorable, whether you are an investor of long-term holds, a first-time home buyer or a buyer who is transitioning from one home to another. Homeowners who want to sell can be much more confident in finding a replacement home and negotiating terms that allow for an easier transition from one home to another, than the last few years.
