#430: December 2022 Market Stats: Will 2023 Be the Year of the BRRRR?

The December 2022 market stats are now out for Colorado, which gives us a great picture of how the year went. In the end, the Denver market grew slightly, while the Colorado Springs market ended negative for year over year growth. While rising interest rates caused many buyers and sellers to put their plans on hold, we’re optimistic that the market will rebound in 2023.

Check out the podcast or YouTube video to hear the full conversation with Envision Advisors agents Jenny Bayless and Preston Newberry, Cornerstone Home Lending Loan Officer Bill Rodriguez, and me. We talked about stats, creative deals we’re seeing, and and our predictions for the future.

Three Learning Options!

1. Listen to the podcast “#430: December 2022 Market Stats: Will 2023 Be the Year of the BRRRR?” Denver Real Estate Investing Podcast
2. Watch the YouTube video.
3. Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.

Denver Market Stats and Observations for December 2022 Inventory

• Up 220% in Dec ’22 vs Dec ’21 year over year (Y/Y)
  • Keep in mind that 2021 was the record low point for least inventory in the last 25+ years.
• Homes were up a bit more than condos.
• Total of 4,750 active listings on 1/1/23.
  • Same time in 2019 – last “normal” time – we had 5,050 active listings.
• From 1985-2021, the average listing count at this time is 12,300 listings.
• It’s great to see more inventory from the record low counts of ’21, but we’re still well below “normal”.
• Keep in mind, this metric can be misleading.
  • The days on market have increased a lot, so any given listing is in the active count for a lot longer than it used to be.

Number Sold

• Dec ’22 Off 42% Y/Y from Dec ’21.
• Condos and homes had the same level of decline.
• The drop in sales is about as expected given the leading indicators we had for new mortgage applications, showing traffic, and under contract counts.
• For the entire year:
  • 2022: 50,700 sold
  • 2021: 64,100 sold (-21%)… keep in mind ’21 was a record year for the entire US and Denver
  • 2019: 58,900 (this year is about -14% from the ’19 run rate)
• National Association of REALTORS expects the US to sell 7-13% fewer transactions in ’23 than in ’22. I think the decline in the Denver market will be 10-15% less than ’22.

Closing Price

• Up 2% Y/Y.
• Homes were flat, condos were up 6.5%.
• Core Logic found that Denver prices went up 45% from 1/1/20 – 5/1/22. That’s when prices peaked. Denver prices have dropped 5% since then. Net, we’re still up +40% since just before COVID.
• I expect ’23 prices to be -2% to +2% from ’22 prices in Denver.
  • If we see price declines, I’d expect they would mostly decline in the first half of ‘23.
• As discussed above, low mortgage rates in place will limit new listings in ’23, as it did in ‘22.
  • Since there won’t be as much inventory build as you’d historically expect, the lack of inventory will help support prices in a time of reduced buyer demand.
  • This limits how much the market prices can drop, regardless of the mortgage rates in my view.
• For the US, NAR expects +1% for home prices in ’23.

Days on Market

• Up 131% Y/Y.
• Average now 43 DOM (was 18 DOM a year ago).
• Condos and homes had similar changes.

Under Contract

• Off 26% Y/Y.
• This looks like a great leading indicator compared to the 42% drop in closing in Dec ’22!
• Condos off 35%, homes off 21%.
• When I mention that I think we’re a little past the worst of the correction, this is the leading indicator I’m relying on most.
• Also, the showing traffic in the past few weeks has been up a little, which supports the improvement in UC.

Discounts

• 1.6% average discount this year vs. Dec 21: average +1.5% premium paid to ask price.
• Condos and homes had generally the same trend.

Colorado Springs Market Stats and Observations for December 2022 New Listings

• Homes
  • Down 30% from last month.
  • Down 34% from last year.
• Condos
  • Down 19% from last month.
  • Down 17% from last year.

Sales Count

• Homes
  • Down 9% from last month
  • Down 41% from last year
• Condos
  • Down 8% from last month
  • Down 43% from last year

Sales Price

• Homes
  • Down 7% from last month
  • Down 3% from last year
• Condos
  • 0% change from last month
  • Down 5% from last year

Inventory

• Homes
  • Down 22% from last month
  • Up 190% from last year
• Condos
  • Down 7% from last month
  • Up 174% from last year

Note: The above Executive Summary is from Lon Welsh of Your Castle Real Estate.

Denver Housing Trends for December 2022

Colorado Springs Housing Trends for December 2022

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