Kelly Moye bought her first house in the north Denver metro area for $120,000. That was in 1991.

Prices likely won’t ever come back down to that level, said Moye, who has worked as a Realtor for three decades. But home prices in the metro area and statewide have shown some early signs that they may be breaking the pandemic-era trend of steep increases.

August was the fourth consecutive month of decreases in the median price for single-family homes in the metro area and statewide, according to the Colorado Association of Realtors’ most recent report. The median price was $620,000 in August in the metro area, down from $660,000 in April.

And while the single-family home prices are still up compared to this time last year, the rate of year-over-year growth in prices has slowed for the last several months in the metro area and statewide.

But Colorado’s housing situation is still dire: This spring, the measure of housing affordability tracked by the association reached its lowest level since at least 2014 for both metro Denver and the state as a whole. While the market remains in an affordability crisis, the tracker has at least started to turn in the other direction.

The federal government’s move in recent months to raise interest rates — the cost of borrowing money — to combat inflation “almost changed our market overnight,” Moye said.

Still, Colorado isn’t seeing what some in the industry have termed a “housing recession,” Moye said — and it remains to be seen how the market will look on the other side of typical seasonal changes.

Different world than in 2008

Colorado’s housing market is in a “totally different place” than it was during the Great Recession, when the market had too much housing inventory, or supply, and people had loans they couldn’t afford, Moye said.

“A lot of times, people make the mistake of thinking we are headed right back to where we were in 2008, and that’s not true,” Moye said.

A typical amount of supply for the Front Range — roughly from Fort Collins to Colorado Springs — is 24,000 houses on the market, according to Moye. But that region has about 6,000 houses on the market, she said in mid-September.

Instead of a “screeching halt” in the housing market, Colorado is experiencing a slowdown to a more sustainable pace, Moye said.

“A housing recession would mean more inventory than demand from buyers, so your supply and demand would be out of whack — it would be out of balance. And prices would be going down, not like the 11% appreciation we’ve seen so far this year, going up” in the long term, Moye added.

What did shake up the market lately was the interest rate hike taking many buyers out of the running.

“Suddenly, they could afford (less) than they thought they could buy, and they ended up renting” or were pushed out of the market, Moye said.

As demand changed, prices have been pulled back, too. From 2015 through 2019, homes in the Denver metro area were garnering about 100% of their listing price — or close to that, according to the Realtors’ report. In 2021, that number shot up to about 105%. Earlier this year, it reached above 106%.

Now, the percentage of the listing price received on home purchases has dipped below 100% for the first time since 2020, according to the report. For single-family homes, the rate was about 99% in August.

“In just a four-month period, we went from buyers … offering well over the seller's asking price to having sellers offer them money to help pay down their interest rate payment,” Moye said.

Housing sees seasonal effect

It’s unclear how long the short-term downturn in prices will continue, particularly because the time of year — not just interest rates — are likely playing a role in pulling prices down.

“With the school year in full swing, we are experiencing a normal seasonal slowdown,” Barb Ecker, a Jefferson County-area Realtor, said in a news release from the Realtors’ association.

She added: “Sellers should be watching to see if more homes will be coming to the market. If not, we may see another strong seller’s market in January.”

(A “seller’s market,” as opposed to a buyer’s market, means there is more demand than supply, so homes sell quickly and the seller has more power to set high prices.)

“For buyers, there is a lot more inventory to choose from currently — however, that may not be the case for long,” Ecker said in the Sept. 13 news release.

Though prices have dropped in the short term, a “true” price decline in the housing market would occur over an annual or multi-year time period, Cooper Thayer, a Douglas County-area Realtor, said in the release.

The coronavirus pandemic shook up the housing market partly because, amid the spread of working from home, some people had flexibility in where they chose to live and drove up suburban home prices.

And as families stayed home, they began looking at housing in new ways. “It was their office, their home, their gym, their schools for the kids, and suddenly people needed way more space,” Matthew Leprino, a Realtor based in metro Denver, has told Colorado Community Media.

When looking at housing statistics, “it’s vital that we look at historic perspectives and shift our thinking to pre-pandemic, pre-multiple offers and yes, pre-extreme price increase madness,” Leprino said in the news release. He added: “The truth is that we have simply returned to more of a 2019 type of pace that's simply less head spinning.”

Low affordability scores

In the long term, housing affordability in Colorado continues to be an issue of staggering proportions. Since the start of 2010 — when the median single-family home price in metro Denver was about $200,000 — the median price has roughly tripled. Statewide, it has tripled as well.

“That’s significant — that’s not expected. It is certainly expected over 20 or 30 years for that to happen, but for us, we had so much significant (price) appreciation starting in 2013 through 2022,” Moye said, using a term for price increases.

The Realtor association’s report uses a “housing affordability index,” or a measure of how affordable a region’s housing is to its consumers. The index is based on interest rates, median home price and median income by county. The higher the score, the greater affordability is.

“The cutoff for it to be affordable is that 100 number,” Leprino told CCM in mid-September. If the score is 100, that means essentially that “the average person could afford the average house,” Leprino said.

The last time Colorado’s market scored above 100 was late 2017, according to Leprino. The last time the Denver metro area hit 100 was October 2017, he said.

In December 2017, the median home price was $378,000 for metro Denver and $363,000 for the state, taking into account single-family and the condominium-townhome markets combined, Leprino said.

The housing affordability index score in metro Denver this August was 55. Statewide, it was 58.

Homebuying demand is likely to continue until the net migration switches, meaning more people leave Colorado than move to Colorado, Moye said.

“I see lots of my clients moving to Cheyenne and Idaho and Montana,” said Moye, who noted that with many employees able to work remotely, people are freer to move to places they can afford out of metro Denver.

Businesses don’t want to locate in a place where their employees can’t afford to live, Moye said, another factor that could influence migration patterns.

Homebuying has grown out of reach for many people because the rise in housing prices in recent decades far outstrips the increase in what American families earn.

Moye pointed to affordable housing programs at the city level as ways to alleviate that issue.

“Personally, I don’t think they’ll really be enough to make a dent,” Moye said. But to some extent, prices fall eventually, even though they will likely never come down to where they were decades ago, she added.

“It will eventually correct itself — at least to a certain degree,” Moye said.

The Colorado Association of Realtors defines the seven-county Denver metro area as Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson counties.