it's that time again it's time again for our mid-year 2022 denver housing market
update only this time we're going to shift our focus as we enter a shifting housing market
we're here this week to cover three topics that have been in the news and on everyone's minds
lately inflation interest rates and recession and before we start be sure to click on
the subscribe button to get more great content like this or click on our calendly link below
to book a time to chat as consumers all of us are experiencing the pain of higher prices on
everything from food to gas to services and as homeowners or potential homeowners many of us
are concerned about our home values an upcoming move or the overall housing market before we
talk about what all of this means we want to take a couple of minutes to briefly explain
what these all are how they relate to each other and how they might impact the housing
markets okay let's start with inflation what exactly is inflation and what causes it
inflation is a measure of the rate of rising prices of goods and services in an economy
there are three main types of causes of inflation first cost push inflation this occurs when prices
rise due to increases in production costs such as raw materials wages and supply issues
second demand pull inflation this can be caused by strong consumer demand for a product
or a service third expansionary fiscal policy this happens when governments and central banks
keep interest rates low thereby making money cheap to borrow for banks and consumers leading to
increased spending and demand for goods and services including you guessed it housing products
does any of this sound familiar that's because in recent years our economy has
been experiencing all of these above scenarios as of june 2022 the annual inflation rate was 8.6
for reference between 1960 and 2021 it's typically averaged around 3.8 percent consumers have seen
double-digit increases in everything from energy food vehicles cars both used and new airline fares
and more all much more expensive than previously so how do we get out of this mess well long story
short the government's main tool to battle inflation is by raising interest rates you
have seen that the government raised rates most recently by 0.75 percent this rate hike makes
borrowing more expensive for what we as consumers pay on everything from credit cards to mortgages
to car loans ideally this slows consumer spending cooling off demand and hopefully lowering prices
the big worry is that raising rates too quickly could dampen demand too much stalling the economy
if policy makers overshoot on rate hikes it could push the economy into a recession
halting and or reversing the progress it has made so far or cause stagflation a situation where
inflation remains high while the economy slows for the short term and where we are currently
these rate hikes cause some pain borrowing is more expensive and prices remain high for a
period of time one thing is for sure we did not see any of this coming looking back at our 2022
housing market prediction video we didn't predict interest rates would rise as quickly as they did
nor did we anticipate the type of inflation that we are experiencing now put simply we were dead
wrong so the million dollar question what does all of this mean for the housing market will
home values drop will there be a crash the honest answer we really don't know never before have we
seen all three of these economic conditions at play at one time plus a period of record real
estate appreciation just prior as a professional realtor there are several key statistics we will
be monitoring closely and continue reporting on about our local markets number one inventory
overall available inventory remains low as of june 2022 current active listings set at 5853 this time
last year we were at 2970. this is an increase of almost 97 from the same time last year but it's
still less than the 25 to 30 000 units we would need to have what is considered a balanced market
this is one of the most important indicators to watch so we will be closely monitoring this
in the coming months number two showings the number of showings across the metro area is
also very telling of the ongoing market and just how many buyers are out there looking at homes
ari colorado the denver area mls reported that showings are down 45
from 2021 to 2022. number three price reductions this number is much more challenging to track
in different reports we've seen the number of homes experiencing price reductions in june
sometimes exceeding 40 percent other trends we are watching days on market median days on market sat
at five days in june 2022 versus four days in 2021 very little change here median sales price
we still saw double digit increases in sales prices up 13 over last year 615 000 this year
versus 545 000 in june of 2021 these housing prices are across all types of homes the number
of pending sales went down year over year 4911 in june 2022 this year versus 6314 in june 2021.
based on what we've reported with a decrease in showings higher interest rates and inflation
this is not a surprising statistic we will be continuing to watch these statistics closely
over the next few months to see what trends we can identify but for now the best thing we can do is
evaluate every individual situation uniquely and put together the best plan based on where
things stand at the current time so just click on the subscribe button to our channel to continue
to stay updated on the denver housing market we know these are some challenging times there's no
doubt about that if you have questions about your current situation or just want to chat about this
and how it affects you let's connect and remember we are always here for you you can book on our
calendar link below or as always simply call text or email to our contact information listed below
you