Denver housing market: The Good, The Bad, The Questions!
Three Trends in Today’s Market
- The Denver housing market has reached record levels in pricing and is finally seeing inventory rise which will slow down the appreciation of homes.
- The 2021 data is showing some slowing down of the momentum earlier in the year in the upcoming trends in housing for Denver. Properties going under contract are slowing down the last two months. Pending contracts is a leading indicator of future sales and slower appreciation.
- Investment opportunities in Denver single family housing market will offer less upside than the previous 5 years, but most certainly are still a bargain compared to renting with low interest rates.
The housing market’s appreciation of the past seven years has turned to near euphoria, at least based on the performance of the sold data from 2015 to 2021, as further evidence is pointing towards a gradual slowing down of the market. The 10% appreciation is un-sustainable, and we are beginning to see signs of a more normalization of the Denver real estate market moving forward for the balance of this year and into 2022.
- July 2021 the data shows an increase of 16% in price over July of 2020 for an average price of $622,092.
- The number of sold homes in July of 2021 decreased to 6,119 or 17% fewer homes closed this year over last year in July and 7% down from last month.
We certainly agree that there are reasons for a desire to have a more balanced real estate market in Denver. That being said, there are a number of unanswered questions that must be considered in predicting the depth of the trend of Denver housing. There are three questions that come to mind after a long-sustained appreciation run as Denver has seen:
- Can the Denver housing market continue to create increases in the number of homes closed year over year for another 5 years?
- Will Denver housing prices be at a risk of reducing?
- Will the average price of a single-family home continue to rise?
The Denver market continues a strong position for sellers as of today and is still one of the best reasons to consider Denver real estate as a solid investment. The opportunity for appreciation since inventory levels have increased is still occurring, albeit at lower levels. We would predict inventory levels to rise over the next 12 months at another 50% from approximately 4000 homes on the market today to approximately 6,000 homes over the next 12 months, as the buyer pool is shrinking
Inventory Trends Drive Sales
- Single Family home inventory is at historical lows and will increase from here moving forward.
- Single Family homes Days on the Market is 21 days on the market.
- Single Family average price of $622,092 for the month of July will start to see this price start to flatten over the next six months.
- The continue luxury home market sales above $1M in sales price is starting to slow down.
- As single family inventory rises sales will slow down and appreciation will be 2-3% per year and some upper priced neighborhoods could see zero appreciation or correction of pricing into 2022.
- Denver will not experience a housing bubble for the balance of 2021. Corrections to some sub areas could occur.
- The increase in the amount of inventory will slow prices, but the recent commitment to hold steady with interest rates will bring buyers to the market causing prices to stablize to a slow growth model.
What should Buyers do in today’s market?
- Know the numbers of sales and prices in the neighborhoods you are searching for homes.
- Become the most attractive buyer by being pre-approved for your loan.
- Study the trends of the price range you are buying within to make the best deal possible for you.
What should Sellers do in today’s market?
- Improve your housing data, meaning, make sure the third-party aggregators information about your home is accurate if you are getting ready to sell.
- Make your home sparkle from the street throughout the entire home.
- Know the supply and demand for your home. Overpricing is a mistake in today’s market.
So, How’s the Market, August 2021 All data taken from REColorado on August 13th, 2021 for the 8 county Denver Metro Area.