The Denver real estate market is on fire right now. Denver is coming off of a historic year. In 2021, more houses were sold than in any year before. In 2022, people are wondering if this trend can last and if they should hurry and get in on the market. To help with this, we provide an in-depth forecast of what is to come for the Denver real estate market this year.
Buyer Demand
Recently, U.S. News rated Denver as the 14th best place to live in the nation. The influx of people to the area in the last few years supports this claim. People are flocking to the Denver area for jobs in the tech field, for the incredible views, for the lovely four seasons weather, etc. Because of this, buyer demand for single-family homes is incredibly high at the moment. The need for homes has far exceeded the available supply, leading to a strong seller’s market.
Housing Inventory
People are buying up homes faster than they are going on the market. Due to the intense demand for homes, new listings declined 5.26% throughout 2021. According to the Denver Metro Association of Realtors, the Denver area had only 1,477 properties in the market in January 2022. This leads some to question the long-term trends of the market if supply cannot keep up with demand. However, Denver is aiming to address this issue.
Lack of Inventory
The low number of listed homes is due to rapid population growth, but also it is attributed to disruptions in the supply chain. Homebuilders have overcome many difficulties throughout the COVID-19 pandemic, and recently they have been unable to attain certain required materials. The lumber industry, for example, has experienced drastic disruptions, which has caused decreased inventory and much higher prices. However, reports suggest that the Denver area’s housing construction industry is beginning to rebound. Materials are now becoming more accessible, and build sites are ramping up.
Mortgage Interest Rates
Some good news for potential buyers is that mortgage interest rates have remained relatively low, especially for such an in-demand buyers market. The bad news for potential buyers is these mortgage interest rates are not expected to stay down. As the demand climbs, driving up home prices, mortgage interest rates will also begin trickling upward. This means that although the market is currently very much in favor of sellers, buyers might want to invest in a home now with a relatively low mortgage interest rate.
Price Increases
House prices have drastically increased throughout 2021 and will continue to go up. Even as builders are trying to deal with the housing inventory issue, demand for homes is expected to remain high. With so little supply, sellers can increase their prices and are forced to negotiate much less. Based on DMAR data, the overall cost of a single-family home in the Denver area went up by 16.79% in 2021. In 2022, the price will climb. The current rate of home appreciation is 16.37% in the last twelve months alone. Some experts are even expecting double-digit appreciation this year.
Median Home Prices
So what are the price points we are talking about? The 16.79% increase in price has translated from lower-cost homes to luxury homes across the housing spectrum. Currently, a single-family home is being sold at a median price of $595,000. For luxury homes, the average sales price is $1.6 million. These prices are a financial barrier for many in the Denver area, but with the influx of tech and energy industry workers, these prices are being sold quickly. They are willing to spend more money on a solid real estate investment opportunity.
Overview of the Denver Real Estate Market in 2022
So, all-in-all, we are expecting the trends of 2021 to continue strong in 2022. There are no current indicators that the Denver housing market will slow down. As discussed, the inventory of homes is lagging behind the demand, but builders and the city are convinced that they can make progress as the year goes on. If they are successful, 2022 could prove to be an even hotter year than 2021. The market is undoubtedly a seller’s market. However, if you are a buyer, there are incentives to jump in now, rather than later, such as low mortgage rates and increasing house prices.
