The Denver Real Estate Review | July 2025
Boots on the Ground
Are we in a buyer’s market? On paper, not quite but real estate is hyper local and there are certainly segments of the market that are.
The condo and townhome market for instance has been a buyer’s market for several months. Single family homes would still technically qualify as a seller’s market.
The stats aren’t really telling the full story though. The dichotomy between working with buyers and working with sellers right now honestly makes no sense.
For sellers, if the home isn’t perfect or priced very low, you risk getting written off completely by buyers. I’m seeing homes priced 5%-10% under comps. Once that happens, you’re in for the long haul.
For buyers, they’re all chasing the same few listings – the perfect homes or the way underpriced homes. Bidding wars are very common. The mentality of “It’s been on the market more than 2 weeks, there must be something wrong” it still very much alive.
Because of that, most of the homes that are closing have gone under contract in 1-2 weeks. Everything else has been on the market for 60-90+ days with several price reductions.
There’s no in-between.
So far, sellers who gamble with pricing well below comps have been rewarded heavily. Prices on most of those homes getting pushed right back up by competitive buyers, sometimes even over what the comps are showing.
Otherwise, sellers are likely to join the pack with hundreds of others trying to find any way to gain an edge and make their listing stand out amongst the crowd.
This will push inventory levels lower throughout the rest of the year. Prices are likely to keep softening until/unless something changes to increase buyer demand.
Essentially, what we’re seeing is 2+ years of pent-up supply hitting the market all at once, while demand has remained relatively unchanged. The number of sold listings is right around the same levels that we’ve seen since mortgage rates shot up in 2022.
Fannie Mae and Freddie Mac
One thing I’m keeping a close eye on that could really help stimulate demand and normalize affordability, is the push to bring Fannie Mae and Freddie Mac – which operate the secondary market for mortgages – out of government conservatorship.
Without getting too deep in the weeds, these entities were placed under government control during the great financial crisis in 2009 to avoid an even more catastrophic collapse.
Over the last 15 years, this control allowed the FHFA and Fed to manipulate the mortgage market and drive rates artificially low. Those 3% mortgages – as great as they are for those who have them – would never have happened without the conservatorship. If those rates never happened, home prices wouldn’t have inflated to where they are.
Now, we have sky high home prices and historically average mortgage rates, which equals the current affordability crisis. Basically, the gov’t led us down an unsustainable path with the only options for improving affordability being:
- get home prices to fall 30%+ – economic disaster!
- wait for wages to catch up so people can afford a home – I won’t hold my breath!
A more competitive and more diverse mortgage market would have every incentive to create volume (sell more mortgages). This is likely to unlock demand much faster and much more effectively than 6% rates on their own.
Without that, we could be looking at several more years of stagnation and affordability challenges in the housing market.
As long as it’s done right, re-privatizing these entities would get the gov’t out of the way and open the door for innovative mortgage products tailored to bridge the affordability gap while the market rebalances to function normally.
Financing Snapshot
Mortgage rates have been much less volatile so far this year, making small sustained moves downward. While everyone is focused on the Fed reducing the Fed Funds Rate – the effect on mortgage rates from that could disappoint without real stress in the economy.
Right now, that isn’t the case, but the market does seem to be pricing in some easing from the Fed. As long as the tariff debacle doesn’t prove inflationary, expect rates to keep moving slowly down to the mid-low 6% range by the end of the year.
Market Insights
Key Takeaways:
Demand is measured by the number of Closed Homes – which is relatively steady since 2022 but falls short of a “normal” June market by about 2,000 closings (typically around 6,000).
Supply, at 14,000 Active Listings, is double what we would expect for a “normal” June market (between 6,000-8,000 listings). This creates a tough market for sellers!
Remember, price data only counts closed homes. With plenty of listings on the market since March-April with several price reductions. If/when those start to close – expect prices to go negative