According to a recent report from Axios, we won’t be seeing any steep drops in home prices this spring season, unfortunately.

While many think it’s just higher interest rates and increased borrowing costs impacting the market, the fact is that’s just one piece of the housing affordability crisis. In reality, lower mortgage rates could push up home prices in Denver and nationwide if demand surges and inventory remains tight.

Lower interest rates will unlock the golden handcuffs that have kept many sellers from selling over the last two years. And if that happens, more homes will hit the market, but more buyers will flock to it, driving prices back up. In other words, the lower interest rates get, the more competitive the market will be.

30-year mortgage rates are down from 20-year highs, but have crossed 7% again, and experts don't expect the Fed to make interest rate cuts until May or June.

In 2021, when rates hovered below 3.5%, bidding wars were rampant and home prices surged by double-digit percentages. Historically, home prices are elevated in spring and summer when more buyers are out bidding. Despite cooling from 2022 highs — peaking around $615,000 — Denver median home prices are still higher than they were pre-pandemic.

The Denver-area median sales price was up roughly 32% from December 2019 to December 2023.

While mortgage rates aren't guaranteed to fall, if they do and curbing inflation is the primary motivation, home values and competition likely won't cool down. However, if the drop involves disinflation and early signs of an economic recession, there would be more relative relief for those left in the market when it comes to affordability and competition.

While the current climate may seem gloomy for potential buyers, if you’re ready to become a homeowner there are definitely opportunities available. It all depends on your budget and urgency to buy. If you’re on the fence, reach out to one of the experienced professionals at Metrowest and let’s go over your options!