Denver Real Estate Market Update: Fall Slowdown and Rate Cuts Shift the Market
As predicted in last month’s update, we are now firmly in the seasonal fall slowdown for the Denver real estate market. Key metrics such as active listings, days on the market, and months of inventory showed a slight uptick from the previous month, while new listings remained relatively flat. However, this data was based on activity from last month—then out of the blue, like a clear Denver sky, we started to notice a shift in the market.
Economic Indicators Signaling a Change
It all began with a negative jobs report and tech companies missing their earnings projections. Soon after, weaker earnings reports spread across multiple sectors, causing stocks to tumble. In addition, the Consumer Price Index (CPI) reports showed a continuing drop in inflation, leading many to speculate that a rate cut was imminent. Initially, predictions called for a 25 basis point (bps) cut, but as the economic data softened, a potential 50 bps cut emerged as a real possibility.
Rate Cuts and Their Impact on the Denver Real Estate Market
So how did these economic shifts affect the Denver real estate market? Almost immediately, the market began to price in lower interest rates, and we saw mortgage rates dip below 6%! This shift brought some previously hesitant buyers off the sidelines, as many recognized the opportunity to lock in a lower rate before the spring market heats up.
The drop in rates was significant. For example, a reduction from 6.5% to 5.875% on a $600k home saves the buyer roughly $200 per month. With home prices remaining flat throughout the year, this lower cost of borrowing made purchasing a home more attractive. As a result, we noticed an uptick in activity, including more overlapping showings, multiple offer situations, and an increase in pending and under-contract sales. The uptick was relatively minor, but the shift in client sentiment was noticeable.
NAR Settlement and Its Impact on Buyer-Seller Dynamics
The recent National Association of Realtors (NAR) settlement has officially gone into effect, bringing some key changes. Now, buyers must have an agency agreement to tour homes with an agent, even for a single showing, and sellers’ agents can no longer advertise buyer-agent commissions on the MLS.
Despite these changes, most sellers in the Denver market continue to offer buyer-side commissions in line with historical norms. The reason is simple: offering a buyer’s commission attracts more interest and benefits the seller, as the sales price is still a net arrangement. Sellers who want to maximize exposure understand that paying the buyer’s commission is essential, especially in a competitive market.
The economic fundamentals haven’t changed—buyers still want expert advice from experienced agents. Buyers prefer (and benefit) to finance agent commissions, rather than paying out of pocket. For that to happen, sellers need to cover the commission. Once we work to explain this to both buyers and sellers, both sides see why seller-paid commissions make sense. This core principle will continue to shape the market moving forward.
Looking Ahead: Opportunities in a Shifting Market
As we move further into the fall, it’s clear that the combination of dropping mortgage rates and stable home prices is creating unique opportunities for both buyers and sellers. For buyers, the current market presents a chance to secure lower rates and find their perfect home before the spring rush. Sellers, meanwhile, are still benefiting from offering competitive terms to attract serious buyers.
At The RealGroup, we always prioritize value in every transaction, from the buy side to the listing side. Our clients benefit from our deep understanding of the market, and our commitment to providing unmatched service continues to set us apart. Whether you’re looking to buy or sell, we’re here to help you navigate the ever-evolving Denver real estate landscape.
Conclusion: Market Moving Forward
The Denver real estate market may be slowing down for the fall, but recent shifts in interest rates have shown that opportunity still exists. With potential rate cuts on the horizon, we expect activity to pick up again as we approach the new year. If you’ve been considering a move, now is a great time to explore your options and take advantage of the current market conditions. Feel free to reach out to The RealGroup for personalized guidance—because in this market, having the right team by your side makes all the difference.
*Featured Image created by CoPilot – prompted to sharpen and enhance actual picture from 1545 S Steele