2024 in Real Estate: The Good, the Bad, and the Ugly – And What It Means for 2025

As your trusted real estate advisor, I can confidently say 2024 was one for the books. If you felt like it was hard to make sense of the market this past year, you weren’t alone. Between fluctuating interest rates, a patchy housing market, and sweeping changes to industry practices – thanks in part to the National Association of Realtors (NAR) settlement – everyone from buyers to sellers to agents had to adjust. While it wasn’t always smooth sailing, here in Colorado, we were in a better position than most states. Practices we’ve been using for years helped us transition more easily into this new era, and I believe we’re heading into 2025 stronger and more transparent than ever before. Let’s break it all down – the good, the bad, and the downright confusing – and talk about what lies ahead.

The Good

1. Colorado Was Ahead of the Curve:
   Colorado real estate agents and brokers have long been required to operate with more transparency than many other states. For example:

   • Here, buyer consultations are a norm for professional, experienced agents. Sitting down with buyers early in the process to explain agency representation, how compensation works, and what to expect during the transaction has been standard practice for many of us for a long time.

   • The Colorado Real Estate Commission (CREC) standard contracts – both for listings and for contracts to buy and sell – have long included negotiable compensation terms. Agents here were already accustomed to openly discussing compensation with buyers and sellers.

   • These processes meant we weren’t blindsided by the changes stemming from the NAR settlement. In fact, they reinforced what many of us were already doing. That’s not to say there wasn’t confusion – there was! But compared to other states, where these concepts were new or poorly understood, Colorado clients have had a smoother adjustment.

2. Increased Transparency Across the Board:
   The NAR settlement forced the entire industry to shine a brighter light on how commissions work and who pays them. Buyers now better understand how their agent is compensated, and sellers have a clearer picture of how commission dollars are allocated. In Colorado, where many of these discussions were already baked into the process, this only strengthened the trust between agents and their clients. Transparency builds confidence, and that’s a win for everyone.

3. More Informed Buyers and Sellers:
   As a result of these changes, buyers and sellers are asking better questions – and that’s fantastic. Buyers are more attuned to what their agent brings to the table, which pushes agents to demonstrate their value more effectively. Sellers are learning how offering competitive compensation to buyer’s agents can still help attract more interest, even if it’s no longer a given. Knowledge is power, and 2024 gave both sides of the transaction more of it.

4. Resilience in Colorado’s Market:
   While some parts of the country saw major slowdowns in transaction volume, pricing, and buyer activity, Colorado fared better than most. Yes, we experienced longer days on market and some price adjustments, but thanks to our strong job market, desirable quality of life, and balanced inventory, we didn’t see the steeper declines that hit other areas. Well-priced homes in good condition still attracted solid offers, and buyers who stayed in the game benefited from the market’s slight cooling.

The Bad

1. Interest Rate Uncertainty:
   The Federal Reserve made things challenging for buyers in 2024 by raising interest rates to multi-decade highs. While rates fluctuated, the prevailing trend was upward, forcing many buyers to adjust their budgets or pause their plans altogether. At the same time, many homeowners found themselves stuck with ‘golden handcuffs,’ tied to ultra-low interest rates from prior years, which made them reluctant to sell and trade their low-rate mortgage for a new one with a higher rate. This dynamic limited inventory, creating additional hurdles for buyers. In Colorado, the impact was less severe than in states with weaker markets, but it still added pressure to affordability and transaction volume.

2. Confusion About Commission Changes:
   Even though Colorado was better prepared than most states, the industry still faced growing pains. Buyers who were used to the old way of doing things had to wrap their heads around the possibility of paying their agent’s fee directly. Sellers, meanwhile, had to think more carefully about how to structure their listings to attract buyers in an environment where compensation was no longer consistently advertised. For agents who weren’t proactive or clear about these changes, it sometimes led to misunderstandings.

3. Fewer Transactions Overall:
   The combination of higher rates and confusion about commissions contributed to slower transaction volume across the country, and Colorado was no exception. Some sellers chose to sit tight rather than list their homes, while others overestimated what their homes could sell for in a market that was no longer red-hot. Fewer listings and buyers led to less activity overall, even in typically strong areas.

The Ugly

1. Miscommunication and Adjustments:
   This year, agents who didn’t adapt to the new compensation landscape struggled – and unfortunately, that sometimes left clients feeling frustrated. Whether it was a buyer surprised by the possibility of paying their agent directly or a seller who didn’t understand the implications of offering less competitive compensation, the learning curve was steep.

2. Economic Anxiety:
   The broader economic uncertainty of 2024 – rising costs, inflation pressures, and layoffs in certain sectors – added another layer of complexity to the market. While Colorado’s strong economy cushioned the blow for many, the uncertainty kept some would-be buyers and sellers on the sidelines.

What Does It All Mean for 2025?

Here’s the good news: Colorado is uniquely positioned to thrive in 2025. Our transparency and long-standing processes will continue to benefit buyers, sellers, and agents alike as the rest of the country catches up. But there are still some things to keep in mind as we move forward.

• For Buyers:
  Heading into 2025, it’s more important than ever to ask questions and assess your agent’s value before signing anything. Don’t just assume the first agent you meet is the best fit – ask about their experience, references, and approach to the new compensation landscape. A great agent will be transparent about how they get paid, what they bring to the table, and how they’ll advocate for you every step of the way.

• For Sellers:
  Sellers will need to be strategic in 2025. Offering attractive compensation to buyer’s agents – even though it’s no longer broadly advertised – can help draw more offers. Pricing your home correctly and ensuring it’s in top condition will also remain critical. Colorado’s strong market fundamentals should keep demand steady, but buyers are increasingly savvy and cautious with their money, so you’ll need to present your home in the best possible light.

• For Agents:
  Colorado agents are already ahead of the curve, but the pressure to demonstrate real value will only increase. Those who embrace transparency, focus on educating clients, and provide standout service will continue to thrive. The days of some agents simply opening doors and collecting a commission check are gone – and that’s a really good thing for the industry as a whole.

What About Interest Rates?

When it comes to interest rates, the outlook for 2025 is mixed. While some analysts anticipate rates might begin to ease later in the year if inflation cools, others believe rates will remain elevated. The Federal Reserve has indicated that they’re prepared to keep rates high if necessary to combat inflation, which means buyers should prepare for rates to hover around current levels in the near term. The good news is that Colorado’s resilient market means opportunities will still exist, even if borrowing costs stay high.

What’s Next?

2024 laid the groundwork for a better, more transparent real estate industry, and in Colorado, we’re already reaping the benefits of our forward-thinking practices. If you’re buying, selling, or just keeping an eye on the market, now’s the time to ask the tough questions, evaluate your options, and work with an agent who truly adds value.

As always, Brad and I are here to guide you every step of the way. If you’re wondering what these changes mean for you or simply want to talk through your goals for 2025, let’s connect! We can collectively navigate this ever-evolving market and make your next move with confidence.

Curious about the stats behind these trends? Let’s talk! I’d love to share insights specific to your neighborhood.