Putting your house up for sale is stressful enough. Now, sellers find themselves having to cut their listing price after the home is already on the market.
Two to three times more sellers in Denver, Fort Collins and Colorado Springs reconsidered their list prices and then lowered them in June compared to a year ago, according to new data from Zillow.
Results are coming in on how much prices changed in June. Not the average price the house sold for, though. Those have barely budged. There’s also the latest job report that shows Colorado has recovered 110% of the jobs lost in the pandemic, which helped push down the state’s unemployment rate to 3.4% in June. More on that below.
But first, let’s talk about housing.
Zillow says 18% of Denver and Colorado Springs sellers cut sale price in June
Cutting the price of a house after it hits the market is normal. But it doesn’t come without adding stress for the seller.
The share of listings with a price cut in June for Denver was 18.3%, up 7% month over month, according to data from Zillow. So, if there were 4,807 houses available in Denver for active listing according to Federal Reserve Economic Data, 879 cut their prices.
In Colorado Springs, prices were cut on 18% of listings. In Fort Collins, they accounted for 9.5%, a threefold increase from June 2021.
“Sellers in Denver and Colorado Springs are getting anxious due to the sudden pullback in demand from buyers in those markets,” senior Zillow economist Jeff Tucker said in an email. “The Mountain West is transitioning quickly from a white-hot sellers’ market toward much more balanced conditions, and many sellers have been caught off guard by this sharp turnaround. Some sellers overshot the mark with their initial list price, but after last year’s big run-up in home values, they still have a lot of room to find a price point that will sell.”
But price cuts are normal and the trend has repeated itself historically. There were even price cuts last year as the housing price growth in Colorado seemed unstoppable. The number of sellers cutting their list price in June is now in double digits in the U.S. as well at 14.5%.
It’s normal because homeowners who cut their listing price often “overprice and don’t realize (declining) market value,” Zillow economist Nicole Bachaud said.
Denver and Fort Collins both were below the national average for the median size of price cuts. But both places are increasing. The median price cut in Denver was 2.7% in June, compared with 3.3% nationwide. In spring 2021, Denver’s median price cut was 2.3% while the U.S. was 2.9%. Denver was also at a historical low when it came to the number of listings with price cuts at only 6.1% of houses.
Rent increases slowing
Just like home prices, rents are still much higher than they were pre-pandemic. According to Zillow’s data, typical rent in the U.S. crossed the $2,000 per month threshold for the first time. In Denver, monthly rent is now around $2,005, up 20.4% since June 2019.
But the rise in rents is expected to decelerate for a number of reasons, Tucker said. They’re still growing, just slower.
“A rapid run-up in rents that peaked in February was likely a one-time event, driven by a return to cities and people moving out of shared apartments or their parents’ house. We’re expecting rent growth to ease back down over the next several months as vacancy rates rise above historic lows,” he said. “One factor that could slow the return to normal is the high cost of buying a home, which will encourage many renters to renew their lease instead.”
Time dwindles for renter assistance
There’s still money available for folks who struggle to pay rent. But the federal Emergency Rental Assistance Program is now in its final phase, according to the Colorado Department of Local Affairs, which has been disbursing hundreds of millions of dollars to help residents pay rent.
During the pandemic, federal funds paid up to 15 months of past-due, current and future rent for thousands of Coloradans who suffered a financial hardship due to COVID. Eligibility for the program is no longer limited to renters impacted by COVID, but time is running out.
On DOLA’s site, the agency said as of this month, it’s changing gears to focus on affordable housing because “it remains our primary concern to keep people housed, and ensure any experience of homelessness is as brief as possible.”
DOLA has been paying out more than $20 million a month this year, according to department officials. It’s disbursed about $246 million in rent, or about 65% of available funds. Combined with earlier programs, that’s helped more than 30,000 households in Colorado.
Pains and gains of Colorado housing
When interest rates shot up in June, most people who took What’s Working’s housing poll said they were happy homeowners.
“No plans to move and on a fixed income,” wrote Chris from Pine Junction. “So glad I own!”
In the survey, 83% of 150 people who responded said they owned their home. And 80.6% said they spend less than 30% of their income on housing each month, a rule of thumb for eons.
But another large chunk said they pay nothing because they’ve paid off their mortgage. Of course, there are still taxes and other housing costs. As Dave from Lafayette wrote in all caps: “WOULD LIKE TAXES TO QUIT GOING UP!!”
In an interesting stat: Only 15.7% of about 150 people who took the survey said their housing costs are more than 30% of their income. Of those, 45% were renters. “House hunter but that mortgage rate hike just put ownership out of reach,” wrote Kylie, a renter in Denver.
Andy Stewart, a renter who spends more than 30% of his income on housing, works as a supervisor in the hospitality industry in Vail. He blamed the short-term rentals that are hogging up housing and remote workers with “high-paying finance jobs.”
“There is nowhere to rent in Vail,” Stewart wrote. “Almost impossible to hire staff w/o a place to live.”
This story is from The Colorado Sun, a journalist-owned news outlet based in Denver and covering the state. For more, and to support The Colorado Sun, visit coloradosun.com. The Colorado Sun is a partner in the Colorado News Conservancy, owner of Colorado Community Media.