Metro Denver home sales volume for 2023 lagged behind the totals for the past three years but nearly matched 2019’s sales.
According to the December update from the Denver Metro Association of Realtors, total sales volumes for the past five years show that 2023’s sales dropped less than 1% from 2019 but 18% from 2022 and 28% from 2021.
2023: $28.4 billion
2022: $34.7 billion
2021: $39.3 billion
2020: $33.3 billion
2019: $28.7 billion
During the pandemic, home sales skyrocketed as interest rates hit record lows and buyers competed over limited inventory, pushing prices to record highs. Bidding wars pushed home prices well over list price as buyers snapped up properties sometimes within hours of listing.
The promise of big paydays combined with the job’s flexibility lured new agents to the business.
However, as high-interest rates caused sales to stagnate, many agents may choose to pivot again to another career.
At the same time, real estate brokerages may consolidate offices, cut support staff, or implement other cost-saving measures. Some agencies may merge.
High-interest rates depress the market
Ryan Carter, president of 8z, said homeowners with low mortgage rates had little incentive to sell.
“People who otherwise would move to a new neighborhood, move up to more space, move closer to the mountains, or move to add another bedroom are staying put. We’re only seeing sales compelled by significant life events, divorces, mandated relocation, and expansion of families,” he said.
Carter said he’s never seen interest rates affect the market so much.
“Nationally, 92% of homeowners with a mortgage are locked into a rate under 6%, 82 percent are under 5 percent, and 62% are below 4 percent. That’s a stark difference with a rate in the upper 7s or low 8s.”
Evolving brokerage model
Carter anticipates brokerages will continue to operate on leaner margins and will look for options to cut costs, including consolidating or eliminating office space.
Blank continually analyzes what’s working, embraces technology and software that helps agents operate more efficiently, and plans to look for opportunities to cut overhead and trim staff.
He anticipates agency mergers or acquisitions, especially between commercial and residential agencies.
“I think down the line, we could see some smaller firms partner with more national brands,” Blank said.
Tough times for newcomers
The boom time brought more hobbyists and part-time agents into the market, Carter said. But for those new agents, the past two years have been a shock, and he anticipates some agents will leave the business or put their licenses on hold.
Stacie Staub, founder and CEO of West+Main, anticipates seeing more brokerage mergers and acquisitions.
“Agencies that were built to run lean and efficiently but provide agents with full-service support under a traditional model without the large corporate liability and vulnerability will be amongst the most likely to survive,” she said.
Bustos said long-time agents know that real estate operates in cycles. But, newer agents may struggle to build their businesses and will be more likely to quit.
“Newer, less experienced agents will do one of two things,” she said. “They will either opt out and leave the business or decide to join a team rather than work as an individual agent so they have more opportunities for mentoring and online lead generation to help keep the flow of transactions steady.”
Looking ahead to 2024
Blank anticipates this year will be similar to 2023, with higher interest rates continuing to depress housing availability.
“Denver, in general, is still a lifestyle-driven destination. People will continue to move here and will need housing. The lack of inventory will continue to help prices stay stable.”
But if interest rates drop later in 2024, the pent-up buyer demand could generate a return to bidding wars and escalating prices, Carter said.
“There’s a lot of pent-up demand building in the market,” he said. “If and when those rates start to come down, then we will see a big increase in activity.”
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