In the late 20-teens buying a home in Denver became challenging for first-time buyers or those without unlimited financial resources. In just a few years, valuations skyrocketed and prices followed suit. It wasn’t until the city emerged from the lockdowns and mass business closures of 2020 and 2021 that the market leveled off a bit. Over the past year, home prices in some parts of Denver have actually fallen for the first time in years, while in other areas, prices remained stable or climbed only a modest amount.
Housing Market Trends in Denver
The recent (minor) correction experienced by the Denver housing market makes one wonder what lies ahead. Will the correction gain steam? Will rising interest rates pour cold water on demand? Will first-time buyers find a more agreeable landscape in the years ahead? Or will upward pressure reassert itself?
Things As They Stand
The general consensus is that the current leveling off of home prices in Denver has mostly to do with supply and demand. Statistics published by the DMAR (Denver Metro Association of Realtors) indicate a more than 100% increase in the number of available properties in Denver in January 2023 (4,120) when compared to January 2022 (1,184).
There is little doubt the increase in inventory is exerting downward pressure on prices, but it is a testament to the strength of the Denver market that the downward pressure is not even greater than it is. Another effect of increased inventory is that the average property is spending about three days longer on the market this year than it did last year.
Where The Best Values Can Currently Be Found
Although Denver is one of the country's hottest home markets, that doesn't mean every one-bedroom home in Greater Denver costs the same. There's actually quite a lot of price variation starting with Derby, north of downtown Denver where the median price is just over $411,000 to prospect, where it is a much more imposing $1,800,000. If you are looking for value, think about places such as Aurora, Northglenn, and Thornton, where prices are moderate, and the quality of life is generally high.
Where Do We Go From Here?
As we look forward to the 2nd half of 2023 and into 2024, there seems little chance Denver will lose its status as one of the strongest housing markets in the US. It’s not only the quality and quantity of available inventory that helps ensure that, it is also the quality of life people enjoy in Denver and what a powerful draw that is.
While the incredible increases in valuation that manifested from approximately 2016 to 2021 are likely gone, at least for the foreseeable future, industry insiders believe the Denver market is likely to remain strong, with the following caveats:
- Two years ago, the average 30-year fixed-rate mortgage sported a 3.10% interest rate. Today, that rate is 6.79%. If interest rates continue to rise, it could have a dampening effect on Denver home sales and depress prices.
- The other danger is that of a recession. According to data published in the New York Fed's Recession Probability Index, the US faces a 68% chance of a recession during the period from mid-2023 to mid-2024. And since home prices typically fall during a recession…
Contact Patrick Murray
While some signs indicate trouble on the horizon for the Denver real estate market, there are many who believe in its resilience. If you plan on moving to Denver or you wish to explore investment opportunities in the Denver real estate market, call Patrick Murray / Home Smart Realty Elite at (303) 881-1333.