Metro Denver’s housing market is facing some major headwinds that will contribute to a larger than expected drop in home sales and slower than predicted price gains, according to an update fr…
Metro Denver’s housing market is facing some major headwinds that will contribute to a larger than expected drop in home sales and slower than predicted price gains, according to aDespite the worst global pandemic in more than 100 years, both 2020 and 2021 unexpectedly turned into record-breaking years for residential real estate activity. The initial forecast was that 2022 would come off last year’s 63,684 closings by about 4% to 5%.
“Given the current volatility, do not be surprised by a number that exceeds 9%,” advised Steve Danyliw, past chairman of the DMAR Market Trends Committee, in the group’s mid-year update. Likewise, the committee has taken its forecast of home price gains from the 11% to 13% range this year down to a 9% to 11% range, which is still robust and above the gains seen in most years before the pandemic. But if, the gains in real terms will be closer to 1% to 3%.
The initial forecast was based on a view that inflation was transitory and that 30-year mortgage rates, which have shot up from just over 3% to nearly 6%, wouldn’t jump as sharply as they have. The committee’s expectation is that mortgage rates will end up somewhere between 6% to 7% by the end of the year.
A typical buyer in metro Denver could afford a monthly payment of $2,100 at the start of the year, which would have allowed them to buy a home costing around $540,000, said Nadia Evangelou and Lawrence Yun, economists with the National Association of Realtors, in the update.
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