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Section 8 Housing Changes

[0:00] Is your Denver home at risk of losing 30% in value literally overnight? Well, you might be wondering what the heck am I talking about? Well, that's what I was wondering when I had a client come to me with this exact question because of the recent bill passing, the big beautiful bill. And what that actually means for future bills that are being proposed currently. And this might affect every single one of us in the Denver market, whether you own here, whether you're looking to move here. And we're going to go over that as well as it's the beginning of June, which means May numbers are out. We're going to look at what is going on in the Denver market.

[0:35] How is our spring coming along? April was a little bit slower. Did May pick up at all? And I'm just going to help you out with, you know, your biggest investment in this life, which is your home. And if you're new here, welcome. My name is Alex Sonia. I've been a local Denver agent since 2010, helping people navigate what is going on in our lovely Denver market. And if you ever have any questions, feel free just reach out. I'm completely accessible. My cell phone number here is below. It goes directly to me and I actually answer my phone.

[1:02] All right. So, before getting into May numbers, let's just talk about this elephant in the room here. Why my client was so concerned about potentially losing an instant 30% in home value. Now, this does have to do with section 8. But before you think that this doesn't affect you as a homeowner, hang on for a second because I think this will literally impact all of us. So, here's the bigger numbers, right?

[1:23] Currently, there are about 1.3 million households in the Denver metro area. Half of those are rentals. Half, right? And section 8 is about 16% of all rentals. So, how that shakes down, that's approximately 108,000 households or about 10% of all the housing in the Denver metro area. So, here's the deal. Just a few months ago, Congress fully funded the section 8 housing program for 2025, which was about $32 billion. Okay?

[1:50] which was up from 28.5 billion the year before. Everything looked kind of stable, but now the Trump administration is proposing a major shift starting in 2026. So, they're completely going 180 on section 8 and being federally funded. And when I say major, I mean possibly the biggest change to section 8 housing ever. Okay? They're talking about cutting federal rental assistance altogether and handing the entire section 8 program off to individual states. Right now, that means states would have to run it, fund it, and figure out the logistics of it with some help from grants from the federal government. But here's the twist. They also want to change who qualifies, right? So, rental assistance would be capped at 2 years for anyone who's considered able-bodied, right? But how does it actually affect us? Well, here's the reality, right? Colorado would suddenly be responsible for managing the entire program, right? And if those grants don't go far enough from the federal government, and let's be honest, they probably won't. We're either going to see fewer vouchers issued or higher state taxes to fill the gap, or potentially both, which I would probably bet on both. Now, for landlords in Denver, this could be a huge disincentive to even want to work with section 8 properties anymore, right? and we'll likely adjust the value of the homes by 30% overnight. And kind of here's how. So most of the property value in rental properties, especially multif family, is about how much rent they're getting, right? So if all of a sudden you lose a large segment of the renters, well, your value is going to change instantly overnight. And a lot of section 8 rentals for onebs and two bedrooms is quite a bit more than you would get on the traditional open market, right? Love it, like it, hate it, doesn't matter. That's the reality of it. And so, especially for these multif family homes, right, in areas that are more rental properties than ownership. And let's say you own a home there, right? Because it's a starter home, more inexpensive properties, you're going to be put in that same pool of properties to sell now to investors potentially at a much lower price. And so I think you're going to see a flood of tired landlords selling properties and that's going to trickle down to all of us, right? Million-dollar press properties like probably not going to be impacted nearly as much. Um but you know if you're in Eastern Aurora, Southwest Denver, right? Uh Westminster, Thornton, like you name any of the typical starter home areas and yeah, this could be this could be a big change up, right? But I will of course be sure to keep you posted on what's going on.

Impact on Landlords and Rentals

[4:35] Uh and we'll just we'll just see and kind of navigate it as it comes our way. So, let's get into what in the world happened in May in our Denver market. Starting off with supply and demand as we always do. New listings rocketed up yet again. Okay, so in May we had over 12,000 new listings. The only other time we've had close to that was back in 2022. And I mean this is ever, right? This chart is going back all the way to 2009. So even during the housing crash, like we didn't have this many properties coming new to the market. But how is our market absorbing these? Well, active listings wise is rising quite a bit.

Supply and Demand Overview

[5:15] 24,100. That's a 36% jump year-over-year for May for active listings, right? We haven't seen this many properties on the market since 2010, right? And even 2010, actually, no, 2011 was the last time we've seen this much inventory on the market. Uh, so it's kind of interesting what's going on out there. Pending wise, we were up 12% year-over-year. So, that's a good thing. So, the market is absorbing more inventory this year than it was last year, the same time, right?

[5:45] Interest rates are very similar to where they were a year ago. Uh, so anybody who's been hitting the brakes and not buying a property is finally hitting that breaking point of, okay, it's time to move. And with more inventory on the market, you know, a lot of buyers are getting a little more aggressive, kind of taking some revenge on the last 10 years and what's happened to our real estate market and prices just going up up and away. Um, and so now they're coming back in the game a little bit and they're wanting to be more aggressive on their offers, right? So more properties going under contract compared to the last two years is a good thing, right?

[6:17] They just have more to pick from on the buy side. Closed properties wise, we're down a little bit year-over-year, just a small amount, right? Down 2.4%. So, nothing notable here. Uh, so we're probably going to be on trend this next month to follow what's happened the last couple years. In the last couple years, May and June tend to be our highest close months. And then we drop off from there, starting, you know, in July when everybody's going on vacation, tour to France is happening, and everybody just kind of chills out a little bit. uh days in MLS, the average dropped down to 41, right? It peaked out at 67 uh in January this year and it's down to 41. This is on track. It's still 17% higher than year-over-year, but I mean, we're talking by what, six days compared to last year. Uh nothing notable here. So, just following our typical trends yearly month supply of inventory is peaking up.

[7:12] We are officially Oh, I did not see this. We are officially in a balanced market according to old adages saying that four to six months of inventory is considered a balanced market and we have hit that number for the first time since 2012. So there you go ladies and gentlemen. It took us gosh over 10 years from the great recession to become a a balanced market here in Denver, whatever that means. Um, so showings that are happening right now, um, you know, the average amount of showings on a property is down to about 12, uh, 12 and a half. Uh, which is fine. That's totally normal this time of year. Um, but that's still, you know, a fair amount of showings on your property. Uh, and oh, that's showings to go under contract. My apologies. About 12 to go under contract and then about uh 4.7 showings per month per listing on the market. Meaning the average time, you know, is going to be over a couple of months, uh, according to these showing numbers, but these are just averages, right? Um, so if you're priced well, you got a good home in a good location, you're going to move faster than if you're not. So closed price, we are even. Year-over-year, we are 575. Last year in May, we were at 575.

[8:35] So we have not gone up, we have not gone down. We're just kind of trading in this range. Now, to be fair, if we were to get rid of 2022 spike, right, and we were to take that down to, you know, a normal range, 550, let's say, we actually would be on a consistent uptrend if we got rid of that little spike because in 2023, we peaked out at 570. In 2024, we peaked out at 579. So, we still have a chance in June to poke up. Um, and so if we break that and we go into the, you know, mid 580s at a medium as a medium price, that really means we only have one year as an anomaly. So it's pretty strange out there though what's happening because on one hand we have all of these numbers which are saying, hey, things are still pretty normal. But depending on the type of property that you have, if you're on the market right now, you know that the activity is slow, right? One to two showings a week maybe. And that's if you're priced appropriately. Uh, and when people are submitting their offers, I mean, they're they're going for gut punches, right? 20, 30, 40, 50 grand under ask, uh, just to see what happens.

[9:45] And then when the inspection happens, they're going for round two, asking for another 10, 20, $30,000 worth of stuff. Um, just to see if they can get it right. They still want the house. And a lot of times, you know, you negotiate a fair enough middle ground. Um, but it's definitely still in the buyer's favor right now, right? There's more choices to choose from. Um, and depending on what you're looking at and where, like there is actually some opportunity on the buy side. So, where are interest rates doing? Well, we're hovering the high sixes right now, which has been the same for the last few months. Uh, nothing out of the ordinary there. And then, how are we actually stacking up nationally? Like, is what we're seeing an anomaly with more inventory, or is this the norm? So, looking at some of the stats on Redfin's data center, um, you know, what we're seeing here is that nationally we're up 3.9% in new listings year-over-year. So, we are an anomaly there, right? We're up 8%. Right? So, quite a bit more. Uh, as far as the number of closings happening, you know, we're up 3.9% year-over-year nationally.

[10:53] compared to us we are down 2.4%. So we are trailing the national averages there. Um median sales price we are up 2% year-over-year nationally right where we are not here never we are break even. Um and an interesting stat that I love that Red Fin tracks his price drops. This is how many price drops are happening in the entire market, right? And we can see nationally, you know, they're at about 7% of all active listings getting a price drop. And here in Denver, we are at a little over 10%, right? So quite a bit more in the way of price drops. Um, let's see the month supply of inventory here. Nationally, we're sitting about 16 weeks with about four months, right? We're sitting at about the norm there for the national average. So, I think we're just kind of taking a little bit of a breath. Um, but if you want my prediction, uh, what in the world's going to happen? So, feel like the stock market is kind of doing an okay thing right now, but I'm a little suspect of it, right? Getting close to all-time highs again with prices being as high as they are for everything, right? Food, gas, housing, you name it. Um, I still don't know how a lot of people are affording things.

[12:11] Um, I know in our family we've tightened our belts a little bit. I'm assuming that's probably the same for you. Um, normally in a normal year, we have a 5 to 10% price adjustment from now until January. Okay. Our inventory continues to grow through about July and then it hovers there for a couple of months and then it starts to decrease. So, if you're on the sell side, right, you have to be priced right. You have to look right. Uh, and you cannot expect to get 2022 pricing, right? Or 2023 pricing or even 2024 pricing, right? The active properties are setting the tone right now for what you have to be price-wise.

Market Inventory Levels

[12:51] Not the one that closed four to 6 months ago that closed at 600,000. Well, if you have properties now that are on the market for 575, that is what is setting the price, not the closed one. Appraised values right now are not the issue. It's getting the offer in. Okay. So, over the next six months, if you're a seller, right, prepare for there to be more options even for buyers and likely having to do more price adjustments to get your property sold. Okay? If you're on the buy side, you should be gearing up right now. You should be getting your pre-approval going. Uh because over the next 60 to 90 days is your time to strike. Uh it's when you're going to have the most amount of options available. Uh, and you're going to be able to negotiate the most, right? You don't have to be a jerk and put in offers that are 100 grand below or anything like that. Um, depending on your price point, of course, if you're a few million dollars, that just might be an acceptable thing. Uh, but you also have to be ready if you're looking in a hot market where there's not a whole lot of inventory and every neighborhood is so different. So, if you're looking for a newer property built in 2020, 2021, 22, we can go shopping for days, right?

Pricing and Buyer Strategy

[13:58] And have our pick of the litter. If you're looking for an updated home south of $2 million in Wash Park area, like not going to happen, right? Uh so you just got to know what you're looking at and be well informed in your process. And to stay well informed, what I'm going to invite you to do is there's a link in the description below to get on my weekly newsletter to stay updated on what in the world's happening in our market. And again, if you have any questions, just reach out, call me, text me. My phone number here is below. Now, if you are thinking of moving here from out of state, there has been some population shifts all around the Denver metro area. Uh, and this recent video is going to talk to you about some of the areas that are actually decreasing in population around the Denver metro area.