Don't Believe the Hype: How the Media is Misleading You About Home Prices

What's up, Denver? If you've been checking out the news lately, you've probably seen some headlines about home sellers slashing prices. It's a perfect example of how headlines can terrify more than clarify. So, let's break down what's actually happening with home prices.

Here's the real deal: home prices are still higher than they were a year ago and are expected to keep climbing, just at a slower pace.

However, a recent article from Redfin mentioned,

"Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand."

That could make you think prices are falling, but that’s not the full story.

Sure, Realtor.com reported that 16.6% of homes on the market had price reductions in May, up from 12.7% last May. But that doesn’t mean overall home prices are declining.

Understanding Asking Price vs. Sold Price The asking price, or listing price, is what a seller hopes to get for their home. In reality, today's savvy buyers, dealing with higher mortgage rates, aren't willing to pay a premium, forcing sellers to adjust. That's why you see price reductions. But "price drops" in headlines can misleadingly sound like home values are falling.

Mike Simonsen, CEO and Founder of Altos Research, says,

"Not only is the share of homes with price cuts elevated compared to one year ago, but more price cuts are happening each week than last year."

The final sold price is what a buyer actually pays when the deal is closed. And guess what? Sold prices are still rising and expected to keep going up over the next five years.

What Does This Mean for Home Prices? So, while there’s an increase in price reductions, it doesn’t mean overall home values are dropping. It’s more about demand moderating and sellers adjusting expectations to today’s market reality. Home values are still growing annually, as they usually do in the housing market. According to the Federal Housing Finance Agency (FHFA), home prices went up 6.6% over the last year.

This map shows prices rising nearly everywhere in the country, indicating the market isn't in decline.

Even with price reductions, it’s more about price moderation than price declines. Redfin also noted,

"...those metrics suggest sale-price growth could soften in the coming months as persistently high mortgage rates turn off homebuyers. For now, the median home sale price is up 4.3% year over year to another record high..."

With today's tight inventory, price moderation is more likely than price declines.

Why This Is Good News for Buyers and Sellers For buyers, more realistic asking prices mean a better chance of getting a home at a fair price. It also means you can enter the market with more confidence, knowing prices are stabilizing rather than skyrocketing.

For sellers, adjusting your asking price can lead to faster sales and fewer price negotiations. Setting a realistic price from the start attracts more serious buyers and leads to smoother transactions.

Bottom Line While the increase in price reductions might seem concerning, it’s not a cause for alarm. It reflects a market adjusting to new conditions. Home prices continue to grow, just at a more moderate pace.

So, if you’re ready to make a move in the Denver real estate market, hit me up. Let's go! 🚀

Feel free to contact me at 720-650-7794 or adamgillespie303@gmail.com. Let’s make your real estate goals happen!