It's been an interesting decade for home buyers and sellers in Colorado. The metro Denver real estate market, in particular, came roaring back from the 2009 housing crash, leading to rapid development, tight home inventory and bidding wars among buyers that were more reminiscent of places like New York City and the Bay Area than Colorado's Front Range.
As of the end of 2020, the Denver housing market was the second most competitive in the country, behind only San Diego, and more than 66% of home buyers in the area got into a bidding war when buying their house.
Don't expect this to change much in 2021.
That because, even in the midst of a global pandemic, an economic crash and widespread social unrest, Denver real estate has weathered the past 12 months pretty well. If 2020 couldn't derail this train, there's no reason to expect that much else will either.
Here are a few predictions from the experts as to what the coming year might hold for the local market.
Inventory will be tight in the Denver real estate market
Right now, even for those buyers who are able to pay cash upfront for a home, demand for housing across much of Colorado is outstripping supply. It's a seller's market.
According to the Colorado Association of Realtors, "the 7,235 single-family homes and 3,266 townhomes and condos for sale across Colorado in November represent totals down more than 60% and approximately 46%, respectively, from the same month in 2019."
It's even tighter in Denver proper. The Denver Metro Association of Realtors found that housing inventory has hit a record low. "November ended with 3,415 active listings, down approximately 29% from October’s 4,821 homes and down a whopping 51% year-over-year. If no new houses come on the market, inventory would dwindle in just two weeks."
Prices are rising too
As of November 2020, the average sold price of a single-family detached home in Denver was $615,766 — up more than $80,000 since November 2019, but a slight dip of 1.16% from October. The median price was $513,000, up 14% YTY and down 0.39% MTM.
According to the MSA, the median price of a single-family detached home rose 15.51% annual gain year over year, a rate of appreciation that has more than doubled since last year when it was just over 5%.
"If the home prices continue to rise at this rate, many buyers would be priced out of the market. In November 2019, the median price of a single-family home sold in metro Denver was $453,250, according to DMAR. And the average interest rate on a 30-year mortgage was around 3.58%, according to Freddie Mac."
That's a monthly mortgage payment of more than $1,650 on average.
The city will keep on growing
Per The Denver Post: "Metro Denver is expected to see a 12.5% increase in home sales next year, which ranks fourth highest out of the 100 metro areas examined, behind only Sacramento, Harrisburg, Pa., and Charlotte, N.C., according to the forecast released on Tuesday.
"But home prices — after revving at a 12.8% annual pace in October — will run a more modest 5.4% locally, ranking Denver 33rd on that measure, tied with Columbia, S.C."
According to predictions from Realtor.com, rising interest rates later in the year might (emphasis on might) slow down rising prices in the Denver metro area, but that sellers will remain in control for the foreseeable future.
Buying a house? Selling your home? HIE offers the most comprehensive home inspection and structural engineering services in the region. Contact us today to learn more.