As average 30-year fixed mortgage rates continue to hover around 6%, there’s an expectation that prices of homes for sale will fall. It’s only been a few weeks since the Fed increased interest rates so it’s too soon to see the impact.

Or is it?

There’s still job news below, so scroll down if local housing costs aren’t a concern. See below for … robot jobs!

On June 27, the average list price for a house for sale in Denver was $742,773. Three days later it dropped 2.9% to $721,517, according to multiple listing data provided by Opendoor. Meanwhile, during the same three days, the median closing price fell $26,000, or 4%, to $619,000.

But pay close attention homeowners: The $619,000 price tag in June is still 13.6% higher than median closing prices a year ago in June. And, added a spokesperson for Opendoor, “It’s important to note that the median price hasn’t changed.”

Things are moving so quickly, said Nicole Bachaud, a senior economist at housing site Zillow.

“We had this huge acceleration, this huge boost in spring of 2020 that continued into 2021 that was the strongest year for housing that we’ve really ever seen,” Bachaud said. “Now we’re coming to this period where things are going to cool down really fast as well. And that’s going to look like whiplash for a lot of buyers and sellers in the market.”

However, she added, “the markets are not going to crash, we’re not going to see this huge drop in home values across the board. But it’s gonna look very different than it did in December of 2021.”

And why is that? There’s still demand from consumers to buy a house. Also the number of new homes getting started has dropped off. “What we really need in order to curb this home-price growth is more homes,” she said. “And (would-be) sellers are feeling locked into their current interest rate. If you refinanced at 3%, selling and buying at a 6% rate doesn’t seem like such a good deal right now.”

Price cuts in for-sale houses have been happening for weeks, months and even years in Colorado, according to Zillow data. Even when sales were the strongest last year, there were still houses that cut their price for one reason or another, likely because they were asking too much.

Zillow data for the Colorado Springs, Denver and Fort Collins markets do show that there’s been a sharp increase in the number of houses that cut the list price within the past month. The chart below shows that in early June, 9.17% of the homes for sale in Denver dropped their price in the past month, while 9.1% did in Colorado Springs and 3.37% did in Fort Collins:

Those price discounts in Denver rose to a median of $19,000 in early June, nearly double the amount in January. Colorado Springs price cuts weren’t as sharp and had dropped to $11,050 in early June, while Fort Collins hit $19,201.

Consider it an interest rate silver lining for house hunters forced to save their money after getting outbid on every house in the past year. But it’s not like house prices are falling. They’re just not growing as fast as last year and the real estate industry already expects that the days of multiple offers on a house are over for now.

6%? Bah! Interest rates have been higher

“My first house mortgage was at 14%,” Craig Aberle, a reader who wrote this week in response to last week’s story that renting is cheaper than buying. “It was still a good deal financially.”

Aberle, who lives in Denver, pointed out the many benefits of owning a house today even as interest rates rise. There are tax deductions, equity and loan refinancing when rates do fall, as they did last year when they dipped below 3%.

“Rates at 5% or 6% are modest,” he said.

This isn’t the first time in recent history that mortgage rates hit 6%.

A notable period for mortgage rates were the 1980s, when rates were super high — in the teens, according to the Federal Reserve economic data. The peak of 16.64% in 1981 makes today’s 6% a bargain. For people who bought homes in 2018 or earlier, current interest rates are just a return to earlier times.

However, new budgets and increasing housing prices make buying homes for new homeowners nonetheless inaccessible. Housing prices have gone way up in the past five decades.

“Homes were a lot cheaper back then. So a 16% interest rate was maybe the difference of tens or hundreds of dollars a month, and not thousands of dollars a month,” Bachaud said. “A home is a very different type of purchase than it was decades ago.”

The typical Colorado home value of $126,900 in the 1980s is drastically different from the typical home value of $604,065 reported in May Zillow data. That’s a 376% increase. After running it through a quick inflation calculator, that $126,900 home would be roughly $408,057 now considering recent inflation — a relative steal in a housing market seeing prices upward of $700,000.

Historic developments in homeownership add another dimension to the story. In the years after the hike in interest rates in the 80s, homeownership rates in Colorado dipped to a historic low of 58.6%. That’s little more than half of tracked Colorodans living and owning a home according to U.S. Census data.

The most recent data show homeownership rates slowly rising to a rate 64.9% in 2020. With how volatile the housing market has been recently, and as many communities are unable to catch up with zooming home prices, we’ll see how homeownership rates change in coming months.

The benefits of owning are certainly more than what the monthly mortgage payment is. But buyers may not see those for several years, said Bachaud, with Zillow.

“If you’re going to buy something or rent something for two years, the cost of purchasing and selling real estate is pretty high. You’re dealing with transfer taxes, real estate taxes, closing costs and buyer and seller commissions. All of those things make it really expensive,” she said. “For the short term, renting is cheaper.”

Workers are being priced out of their homes, according to a recent report by the Regional Economic Development Institute at Colorado State University, which measured workers’ abilities to afford two-bedroom apartments without becoming rent burdened. That’s when individuals need to spend more than a third of their income to pay for rent. Thanks to Kendall Stephenson, one of the authors of the report, for sending this along!

Workers in Fort Collins, a city with a population of around 170,000, have become increasingly rent burdened over the past decade. In 2010, 36% of all occupations could not afford fair market rent. Now, as of 2020, it’s 52%.

In particular, food preparation and serving occupations face one of the greatest disparities in keeping up with fair market rent. Waiters and waitresses in Fort Collins have a median hourly wage of $12.01. If they wanted to afford rent at fair market prices, they’d need to make almost double their current wages, or $23.92 per hour. Conversely, in 2010 waiters and waitresses would have needed only an hourly increase of about $2 to afford fair market rent.

Health care support occupations are another group that saw a hit at housing affordability. Not only that, but women are disproportionately impacted. Over 70% of people within these jobs are female, and employees would need to see raises of about 50% to be able to afford fair market rent in Fort Collins.

Fort Collins workers’ wages are not keeping up with the increase in fair market rent, and as a result many low-wage earners are forced to commute into Fort Collins for work, the REDI report showed. Although workers are able to save on housing, skyrocketing fuel prices take a toll on their expenses.

This story is from The Colorado Sun, a journalist-owned news outlet based in Denver and covering the state. For more, and to support The Colorado Sun, visit coloradosun.com. The Colorado Sun is a partner in the Colorado News Conservancy, owner of Colorado Community Media.