After soaring higher and higher through the pandemic, metro Denver’s housing market started losing altitude in the second half of last year. Going into 2023, forecasters disagree on whether the market will pull out of its steep descent and stabilize or be forced to make a hard landing that could wipe out billions of dollars in home equity.
“Overall, my biggest prediction for the market in 2023 is stability,” said Nicole Rueth, a senior vice president of The Rueth Team in Englewood, which is affiliated with One Trust Home Loans. “Q1 will still have slower demand, fewer new listings and lower inventory. Q2 will see the transition to lower rates, more demand and more new listings.”
The Federal Reserve’s efforts to quell rising prices will shape much of what happens this year in the housing market. And keep an eye on labor markets, which have proven resilient so far. If people start losing jobs in large numbers — be ready for the oxygen masks to drop down.
Annual consumer inflation rose 6.5% in December, down from 7.1% in November, according to an update Thursday from the U.S. Bureau of Labor Statistics. Mortgage rates for 30-year loans averaged 6.42% last week compared to a 3.5% rate a year earlier, according to the Mortgage Bankers Association.
Lawrence Yun and Nadia Evangelou, economists with the National Association of Realtors, also predict a stabilizing market, noting they expect mortgage rates to settle in the 6% range. While that’s much higher than where they started in 2022, having stability in borrowing costs, combined with improved affordability, should allow for homebuying activity, which was down 20% last year in metro Denver, to strengthen.
Nationally, the pair are predicting a flat year for home prices, with about half of the metro areas seeing small price gains and half