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Rising interest rates are THE story in real estate. Rates are over 4% for the first time in almost three years and are fast approaching 5%. Today, Mortgage News Daily says the average rate for a 30-year fixed mortgage is 4.79% nationwide. Rates rise and fall every day, of course. Last Friday rates were close to 5%; two days ago they were 4.85%. Overall, though, rates are trending upward.

Some economists predict that rising mortgage interest rates will slow homes sales significantly and that prices will rise more slowly. Other economists look at supply and demand and say that supply will remain low for the foreseeable future. While demand may decrease, they believe it won’t be enough to slow the rise in prices.

Historically, rising mortgage rates have not caused home prices to fall. They have, however, caused price increases to decelerate. In other words, prices rise more slowly when rates are rising. Freddie Mac statistics show that from October 1993 to December 1994 rates rose 2.38% while home prices rose 3%. From November 2012 to December 2013 rates rose 1.11% and home prices increased 7%.

Wages are rising and that’s helping some buyers, but if rates and prices continue to rise, it may be better to purchase a home now than to wait until they go up even more. Sellers shouldn’t expect to see the same gains they saw over the past couple of years.

We continue to take every prediction we read with a grain of salt, but we believe prices can’t continue to go up as they have over the past two or three years. In 2019, in the Denver area, the average cost of a home that sold was $473,879. Last month, the average price was $633,823. That’s almost 34% higher now than just three years ago.

From 1992 to 2021, typical year-over-year home price growth was about 5.3% We expect home prices to return to more typical rates of growth as the year progresses.

Better service, lower fees. If you plan to sell your home soon, give us a call or schedule a consultation. The Principal Team provides top-notch service and charges lower fees than other agents. Reach David and Tom at 720-782-2468.

Metro Denver Real Estate Market Activity

During the last week:
New Listings – 1046
Back On Market – 136
Price Increase – 166
Price Decrease – 241
Pending – 1531
Withdrawn – 82
Closed – 1286
Expired – 88
Previous Week:
New Listings – 984
Back On Market – 149
Price Increase – 152
Price Decrease – 208
Pending – 1578
Withdrawn – 56
Closed – 1291
Expired – 77

Based on data from REColorado®