Denver Real Estate Sales Drop to Pre-Pandemic Levels in 2023

Metro Denver’s home sales volume for 2023 fell behind the totals of the past three years but nearly matched 2019’s sales, according to the December update from the Denver Metro Association of Realtors. While 2023 sales dropped less than 1% from 2019, they experienced an 18% decline from 2022 and a 28% drop from 2021, reflecting the impact of rising interest rates and reduced buyer activity.

During the pandemic, soaring home sales were driven by record-low interest rates and fierce competition for limited inventory, resulting in record-high prices and frequent bidding wars. The enticing prospect of substantial earnings and the industry’s flexibility attracted new agents, but as high-interest rates led to stagnant sales, many agents may consider changing careers.

Simultaneously, real estate brokerages might consolidate offices, reduce support staff, or implement cost-saving measures, with some agencies considering mergers. Low mortgage rates have deterred homeowners from selling, and only significant life events, such as divorces, mandated relocations, or family expansions, are compelling sales.

Ryan Carter, president of 8z, emphasized that the majority of homeowners are locked into mortgage rates below 6%, with a significant percentage below 4%, contributing to the reluctance to sell. Interest rates have primarily impacted aspirational buyers, and the market is now dominated by those with legitimate reasons for entering, such as life-changing events.

Carter predicts that brokerages will continue operating on leaner margins, exploring cost-cutting options like office consolidation. The evolving landscape may witness mergers or acquisitions, particularly between commercial and residential agencies. The surge in part-time and hobbyist agents during the boom may dwindle, with some exiting the business or putting licenses on hold due to the challenges faced in the past two years.

Stacie Staub, CEO of West+Main, anticipates an increase in brokerage mergers and acquisitions, with agencies designed for efficiency and full-service support likely to fare well. Established agents familiar with real estate cycles may weather the changes, but newer, less experienced agents might struggle and either leave the business or opt for team-based models to access mentoring and online lead generation.

Jared Blank, managing partner with The Agency Denver, foresees a year similar to 2023, marked by higher interest rates continuing to impact housing availability. However, if interest rates decrease later in 2024, pent-up buyer demand could lead to a resurgence of bidding wars and rising prices, according to Ryan Carter.