The Homebuyer Tax Credits expired for qualified buyers who were not under contract on a home on or before April 30th. Looking at the MLS data for central Denver, we calculated a 47% drop in homes under contract between April and May during a time of year when the market should see a seasonal rise.
It’s still too early to know exactly how much of a difference this slump in activity will depreciate prices, if at all.
We analyzed the percentage decrease of homes under contract between April and May by price-range in central Denver. Not surprisingly, lower priced homes were most affected by the expiration with the greatest percentage decrease in contracts occuring in the $200,000 to $300,000 price range.
If prices decrease as a result of falling demand, buyers who opted to purchase after the government credit expiration may be rewarded with lower prices, and with lower interest rates as well. The interest rate on a 30-year fixed conventional mortgage at the end of April was 5%, and as of mid August it is hovering around 4%.
Denver neighborhoods such as Country Club, Cherry Hills Village, Hilltop and Polo Club where inventory is relatively more expensive and homogenous will not be impacted as much as neighborhoods like West Wash Park, Platt Park, and Congress Park where prices are more affordable.