Denver has long enjoyed a reputation as a hip, happening city to live in. It has long been one of the hottest real estate markets in the country, with real estate booming as the economy grows alongside it.
Then 2020 happened, and everyone held their breath. The good news? Denver still came out on top, and despite the coronavirus pandemic throwing a wrench in pretty much everything, experts still predict 2021 is the year to buy a home.
What does that mean for Denver going into 2021? It’s complicated. On the one hand, Denver remains a highly competitive real estate market. On the other hand, as Denver buyers well know, Denver remains an expensive place to live, and 2020 didn’t shake that track record.
Thinking of dipping your toes in the market? Here’s what you need to know about the state of real estate in Denver in 2021.
A Look Back at 2020
Going into 2020, Denver was booming. It was one of the most desirable cities in the United States, with a thriving economy, strong job market, and, of course, some fantastic mountain views.
Of course, no one planned for a pandemic.
In March, an unprecedented number of listings were pulled from the Denver housing market. April saw a resurgence, with prices holding steady and houses selling faster than in 2019. May continued the trend, picking up 56% more new listingsbut still 17% lower than in May 2019. Summer was the hottest of all, with pending sales shooting through the roof.
As of December 2020, Denver remained the second-hottest real estate market in the country, with 66% of buyers in bidding wars through November.
The ultimate takeaway? Interest rates are the strongest indicator. Colorado’s overall desirability, combined with low interest rates brought on by the pandemic, made homeownership even more appealing to local real estate buyers.
Where We’re Headed
The question now is whether Denver is still holding onto its promise in 2020.
For now, at least, that seems to be the case. Most economists agree that while there will likely be growth in every large U.S. city, expensive coastal markets like New York are expected to lose out to Austin, Nashville, Tampa, and, yes, Denver. In fact, Denver is predicted to be one of the top 5 housing markets of 2021.
Even so, the picture on the ground is complex.
Buyers, Sellers, and Home Prices
Overall, a longtime trend in Denver (lack of sufficient inventory) means that the light shines brighter for Denver home sellers than buyers. All told, the metro-Denver area is expected to see a 12.5% increase in home sales in 2021, the fourth-highest growth out of 100 metro areas.
Thanks to the supply-demand imbalance, annual home price appreciation at the start of 2021 is in solid double-digit territory. The average price of a single-family home rose to a record-breaking $629,159, and there were 70% more homes worth $1 million or more sold in January 2021 than in January 2020.
However, there were also 45.4% fewer homes sold in the $300,000 range. That puts the median price point at $510,000 for single-family homes. Condos and townhomes, meanwhile, saw a $397,792 average closing price and a $339,000 median closing price.
The moral of the story? The market reflects the rising prominence of expensive homes in Denver real estate listings.
That’s great news for sellers. At least, until you take a closer look at buyers.
While the desire to own a home is high, the ability to actually do so remains rare, at least in Denver. Buyers are trying to take advantage of historically low interest rates (engineered by the Federal Reserve to jump-start the economy). The problem is that home appreciation cancels out the effect of reduced mortgage rates, and many would-be homeowners will once again be priced out of the market.
In plain English? While Denver looks rosy for sellers and high-end real estate buyers, there’s an affordability crisis looming for everyone else. Remember, Millennials are gaining dominance as real estate buyers, and they have more debt than any generation in American history.
Making Sense of Denver Real Estate
Taken holistically, Denver real estate is still performing quite well. There are plenty of opportunities for savvy real estate developers to turn high demand into great results. You just have to know where to begin. We hope this outlook on Denver real estate in 2021 will give you what you need to make the best decision for you.