DENVER — Last week, the Federal Reserve cut its interest rate by half a percentage point, the largest cut since March 2020. This rate cut is already trickling into the real estate industry — prompting more home-buyers to get off the fence and into the market.
But the promise of a lower mortgage payment isn't the only thing that is contributing to a softening housing market in the Denver metro area.
Take Sam and Michael Gustafson for example. They are looking to buy their first home together.
"Probably six, eight months we've been seriously talking about it, and then we just started looking within the last two months," Sam said.
That was months searching for four walls to call their own. Sam and Michael said finding a home together is important to them.
“We'll both have a dog in the race and just have something that's going to be ours together that we can say, 'Hey, we came together and did this, and that's home,'" Michael said.
Finding a home has been challenging for thousands of Coloradans, especially since the pandemic. Surging prices, bidding frenzies, and high interest rates kept many on the sidelines.
“We were kind of concerned because, I mean, it was still kind of very competitive then and we could sell our house for a lot of money, but then we still have to buy for a lot of money," Sam said. "Last time, you had to put an offer in same day, and it was just a madhouse."
Real estate expert Joy Dysart with HomeSmart said the promise of a federal rate cut stirred prospective buyers and sellers. In anticipation of the rate cut, more buyers started looking for their new homes. This anticipation also motivated sellers to list their properties.
"I think the buyers are basically gaining ground just because inventory is higher. It's the highest it's been in a decade," Dysart said.
A rise in available inventory has eased some pressure on homebuyers. People like Sam and Michael can expect two and a half months of inventory to be available to them. Compare that to two and a half weeks during the pandemic.
“If all the buyers out there are looking, we would have inventory enough for them to all get a property within two and a half months," Dysart said. "I am seeing the market start to tick up a little bit, more buyers getting out there, going under contract, more properties going under contract."
Dysart said some people have been waiting for years to move into a property that is right for them.
“People move, on the average, five to seven years, and we haven’t seen that here because they’ve stayed with their other mortgage payment. But now, we’re going to have an opportunity to have lower mortgage payments," she said. "There's been a tremendous pent-up demand of people needing to move. You either want to move across town because of a different job, you have more children, you need more space. I mean, people have been sitting for maybe as long as four years now that have the itch to move."
Dysart also said that buyers now have more breathing room to make a decision. With more inventory available, they have more time to reflect on the listings they've walked through.
"They have more time to think about it. They can go back and look at the house more times. They can take a two- to three-day period to mill it over, to figure out their finances," Dysart said.
And that's exactly what Sam and Michael are doing — crunching the numbers and waiting for the right moment to move on their new home.
“It’s hard to walk away from 2.3% interest, so that’s kind of been our biggest hesitation — walking away from that, kind of jumping out of the frying pan into the fire," said Michael. "But, I think it’s going in the direction that we’re gonna be pretty comfortable.”
If you'd like to keep track of the Colorado housing market trends, you can visit the Colorado Association of Realtors website for monthly updates.
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