denver housing market 2024
/
By Josh Patoka | Published on April 18, 2024
The Denver housing market is one of Colorado’s most active as the state capital is home to many employers and is one of the Mountain West’s largest cities.
People also have been flocking to the Mile High City from more expensive cities in search of a cheaper cost of living and to work remotely in the Rocky Mountains.
However, the Denver real estate market may be reaching an inflection point after years of rising home values as buyer demand adjusts to rising mortgage rates. We look into the current market trends for buyers and sellers.
Denver Housing Market Trends
The Denver Metro Association of Realtors Market Trends Committee (DMAR) mentions in its October 2022 report that the average and median closing prices for September 2022 were the highest on record for that particular month.
Below are the closing prices for different home types in September 2022:
This metro area data consists of 11 counties: Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties.
The previous record for both categories was in September 2021 when the average closing price for residential properties was $618,977. Over 12 months, the average home price increased by $52,047 for an 8.4% year-over-year increase.
DMAR reports the following for residential properties in the 11-county Denver metro area during September 2022:
Active listings at month end: 7,683 (the historical average is 15,663)
Average days on MLS: 26 days (Up 100% year-over-year)
Closed homes: 4,113 (Down 27.6% year-over-year)
Percent of homes experiencing a price drop: 58%
Real estate agents report that sellers are starting to offer price reductions in highly desirable areas and other neighborhoods that haven’t experienced this trend in approximately two years.
As of October 2022, DMAR experts maintain that Denver is in a seller’s market as inventory remains below the three-month benchmark. However, that assessment is gradually changing to neutral as there are more active listings and buyer sentiment becomes more cautious.
Denver S&P/Case-Shiller Home Price Index
While Denver home prices have been at all-time highs throughout 2022, the S&P/Case-Shiller Home Price Index indicates that prices are starting to become more affordable for buyers.
The area’s home price index peaked at 328.51 in May 2022 and the most recent available score dipped to 324.40 in July 2022. This regional score is also higher than the 307.44 national average, meaning buying a home in Denver is relatively expensive.
From a historical perspective, the Denver metro area index reading was only 226.84 in January 2020, right before the pandemic and the subsequent surge in real estate prices.
Denver Housing Market Forecast
The recent trends of decreasing housing prices indicate that the Denver real estate market is transitioning from a seller’s market to a neutral landscape.
Libby Levinson-Katz, chair of the DMAR Market Trends Committee, predicts a balanced market is approaching after 16 years of being seller-friendly. She also states that the typical Denver real estate cycle lasts seven years and is due for a correction.
Housing prices may decline as inventory increases from the historically low supply levels in 2021. Properties in the premier and luxury categories with a listing price above $500,000 will likely see the most significant reductions and remain on the market longer.
However, homes that are competitively priced and list below $500,000 are expected to have stable property valuations with minimal or no reductions.
Is It a Good Time to Buy a House in Denver?
Housing in Denver is starting to become favorable for buyers for the first time in over a decade as average prices are beginning to dip.
However, home prices remain above the national average and are still expensive from a historical perspective. Thankfully, several Colorado first-time homebuyer programs can offer down payment assistance and make the purchase more affordable with forgivable loans and grants.
Homes continue to sell quickly with an average listing period of approximately one month as the available inventory remains relatively low.
Who Should Buy a Home in Denver?
Consider actively bidding on homes if you need housing now or are shopping in the classic market with average selling prices from $300,000 to $499,999.
Prices in either situation are not anticipated to drop quickly as the housing market appears to be in the early stages of a correction as buyers digest higher inflation and mortgage rates.
Attached homes selling below $500,000 are the most affordable option. It’s possible to buy this residential property type at or below the listing price, according to DMAR.
In comparison, detached homes with a similar price range continue to be competitive due to an inventory shortage. High prices are also causing buyers to drop down to a cheaper price band to stretch their buying power.
When to Avoid Buying a Home in Denver
The wait can be worth the reward for patient buyers looking to purchase a property worth more than $500,000 as these pricier properties are experiencing the biggest price reductions.
Listing prices for luxury homes in 2023 are more likely to be lower than at the end of 2022 since buyers are becoming less eager to submit an offer at today’s prices and mortgage rates for conventional home loans and jumbo loans.
Market conditions may still favor sellers but they are losing pricing power.
Is It a Good Time to Sell a House in Denver?
Denver remains a seller-friendly market and most people selling today have built equity, meaning they may have an easier time affording another home. Therefore, potential sellers should consider listing their home now while market conditions remain favorable.
Inventory still remains low and listing prices remain near all-time highs, although price reductions are more common on properties listed above $500,000.
Additionally, realtors report that aspiring buyers are more apt to require a home inspection before closing on a property. A pre-closing inspection is common, but many winning bids have been foregoing this practice due to high demand and low inventory.
To sell a home quicker, sellers may consider being more cautious and list with a conservative price. If the listing price is lower, buyers could be more apt to pay above the asking price or waive contingencies to put a new roof over their heads.
Are Denver House Prices Going Down?
Data suggests a near-term peak in May 2022 according to the St. Louis Fed, despite average and median closing prices setting monthly record highs versus the previous all-time highs from 2021.
While prices are trending lower for many property types, sellers can still receive attractive offers from out-of-towners migrating to Denver. A Redfin study from July 2022 reports that people moving to Denver have a maximum budget of $983,761 versus $879,964 for locals.
As a result, market conditions make it possible to sell higher-priced homes, although potential buyers are becoming more selective and have more options to choose from.