MORTGAGE RATES

After nearly three years hovering below 4 percent, average rates on 30-year fixed mortgages cracked the 4 percent barrier in mid-March. That’s when inflation influenced the Federal Reserve to raise borrowing rates for banks, indirectly driving up rates for housing loans.

By the time mortgage rates surpassed 5 percent in mid-April, the math for monthly mortgage costs was impacting affordability. Higher costs caused some would-be buyers to shelve purchase plans. Average rates eventually topped 7 percent in November, before retreating closer to 6 percent by the end of the year (and, notably, on par with the average rate between 1998 and 2008).

INVENTORY

Tight inventory has been a reality of the local housing market for several years. Today, available homes for sale across the region still linger well below the traditional standard for a balanced housing market, which is six months of supply.

The good news? As demand relaxed in 2022, availability inched back toward balance. For instance, the supply of homes priced between $500K and $599K was down to a few days in much of Northern Colorado during January. By November, supply across the region was back to a month or more. For sellers, it’s noteworthy that continued constraints on supply were serving to keep prices steady.

MARKET PIVOT

At the outset of 2022, buyers and sellers were coping with the confluence of low inventory, high demand, and significant affordability—made possible by historically low interest rates. “Appraisal gaps,” when purchase offers exceed appraised value, were becoming a familiar challenge.

Less than 12 months later, the housing market has been turned on its head; as interest rates climbed, demand slowed and affordability faded. “Appraisal gaps” are all but forgotten. Only the inventory picture remains somewhat similar, as buyers and sellers pivot to distinctly different real estate conditions.

As the year wrapped up, elements of both a buyer-friendly and seller-friendly market were visible, depending on specific locations and price points. There were instances of sellers who received multiple offers, and cases where buyers could negotiate concessions from sellers.

With 2022 in the books, let’s take a closer look at the market data that shaped the year in real estate.

2022 ments of both a buyer-friendly and seller-friendly market were visible, depending on specific locations and price points. There were instances of sellers who received multiple offers, and cases where buyers could negotiate concessions from sellers.

With 2022 in the books, let’s take a closer look at the market data that shaped the year in real estate.