major challenges in denver metro area for new home seekers as median home price increases by 21% in past year
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By Shawn Chitnis | Published on March 5, 2021
The housing market in the Denver metro area has seen a dramatic increase in home prices of more than 20 percent over the past year, making it even more competitive for families to buy their first home. Those who were able to purchase a house say they had to open their search beyond their initial expectations as realtors say the inventory will only improve slightly for the rest of 2021, keeping it a seller’s market.
“We have two children, the square footage we could get for the price point we could afford was not worth it especially since we plan to grow our family,” said Lauren Kellond, a new business owner who lives with her husband in Highlands Ranch. “I’m also a Colorado native so it’s sad to see that we literally can’t afford a home in my home.”
The couple has been together for almost seven years and started seriously looking last summer into buying their first home. But they quickly saw online on real estate websites that they were not going to find a house in their budget with the features they needed.
“My husband stalks Zillow,” she told CBS4 on Thursday on a video conference call. “I had to take a step back because it’s just discouraging, I know he knows.”
The Denver Metro Association of Realtors reported for March 2021 that the median home price was $530,000, an increase of more than 4% from the previous month and up 21.84% compared to a year ago.
“It’s been crazy but it’s also very gratifying to be in a market that’s so appreciating,” said Dee Nielsen, a new homeowner in Littleton who started thinking about buying last year. “I knew no matter where I bought and what I bought, I was buying something that was an investment to me.”
She has lived in Colorado for eight years and started saving up well before she spent six months looking for her first home. She acknowledges there was a lot to learn but after looking at 30 house and making offers on five, she closed on her new home last week.
“A lot of the challenges came in just being unaware of the buying process,” Nielsen told CBS4 on Thursday. “Losing out on those offers doesn’t mean you’re not going to get a home.”
Her search took her across the metro area but focused on communities south of Denver. She said through the process she realized that updated flooring and lighting were just some concessions she would need to make to find her first home. Her only requirement was having a backyard for her dog and friends to come visit her. She did not even worry about a garage.
“Just being open minded on what you’re looking for,” she said. “I always knew I would own a home but I never knew I would do it buy myself and that’s the coolest thing in the world. I own this.”
Her advice to others is to understand that you cannot expect to get everything you want. She said among her friends between the ages of 26 and 35, the millennial culture demands the latest amenities when older homes are a solid starting point for your first house. Neilsen also learned quickly other buyers were willing to pay $60,000 above the asking price.
“It is not an easy process, you really have to take a deep breath and understand that it’s not going to be easy, you’re going to lose a lot,” Lori Abbey said, a realtor and Nielsen’s agent for her search. “You’re going to find something that you love, and you’re going to lose and you’re going to be upset.”
Abbey said prices increasing by double digits in one year is significant on its own but more than 20 percent is unheard of and she understands why buyers may be scared by that figure. But she says the data is supported by more people working from home in a pandemic, including those moving to Colorado from the coasts who are willing to spend more money in a relatively cheaper housing market.
“It’s not a bubble, it’s a what is actually called a boom, we are now becoming a big city,” Abbey told CBS4.
What makes this housing market different from the bubble around 2006 is that the mortage fraud and regulations that were an issue then have been addressed. She says this is clearly a reaction to the low supply and high demand. For first time buyers a few neighborhoods in Denver remain including Athmar Park, Baker, Virginia Village, and Westwood, according to Abbey. But most of her clients have to look to the western suburbs including Arvada and Lakewood.
“I think it’s going to be tough for everybody but I do foresee it being a little bit less tough in 2021 than it has been the first three months of the year,” she said.
A balanced market for buyers and sellers would require 26,000 homes available in the metro area, it is currently near 1200 houses. New buyers say it is exciting to see their property increase by $10,000 soon after their purchase.
“It’s going up so high and it’s not dropping,” Nielsen said. “Have faith in the state we live and the time we live and that’s it for me, I don’t have any doubts.”
But for those who are waiting like Kellond, it is frustrating to see the family success they once believed was more than enough to become a homeowner is no longer the case. She plans to wait another year and focus on her new business before looking at the housing market again, hopeful it will finally slowdown from its current rate.
“It’s insane to think if you had have told me 10 years ago that we would have the income we have now, I would have been ecstatic,” she said. “We’re going to make it and the fact that it’s still not enough is insane.”