The Denver, Colorado real estate market has officially entered turbo mode. So lower your safety bar and hang on for the ride, home buyers.
According to a recent nationwide housing report, the Denver metro area is one of the fastest-moving housing markets in the country. At least among the nation’s 50 largest metros.
And that’s not surprising, when you consider the supply and demand situation within the Denver real estate market. Steady declines on the supply side, combined with strong activity on the demand side, have made it one of the hottest housing markets in the country during 2021.
Denver, Colorado: A Turbo-Charged Housing Market
At the end of April, the research team from Realtor.com published a housing market report with data for the nation’s 50 largest metropolitan areas. According to that report, the Denver-Aurora-Lakewood area real estate market is currently one of the fastest in the nation (among major cities).
Specifically, this report showed that the Denver metro area had the lowest median number of “days on market” among the nation’s largest metro areas. Basically, this means that homes are going under contract more quickly within the Denver housing market, compared to the other 50 metro areas examined for this report.
In April 2021, homes listed for sale within the Denver-Aurora metro area spent a median of just 15 days on the market. That was 19 days lower than April of last year, and the lowest level among the country’s 50 largest metropolitan areas.
To quote the Realtor.com report:
“Homes sold even faster in the 50 largest U.S. metros at 34 days on average, down from 50 in April 2020. In Denver, homes sold in an average of 15 days, while the median time on market in Columbus, Ohio, was just 16 days and 18 days in Austin, Texas.”
These statistics reinforce something we already knew. In 2021, the Denver, Colorado real estate market is one of the most active and competitive in the nation.
Supply and demand have a lot to do with this. Like many major cities across the country, Denver currently has a very low level of inventory relative to the number of buyers seeking homes. These lopsided market conditions have boosted home prices over the past year, while also making the Denver real estate market one of the “fastest” in the nation.
Related: Why a 2020 housing crash is unlikely
A Steep Decline in the Number of Real Estate Listings
As mentioned above, tight inventory conditions made the Denver real estate market highly competitive throughout 2020. Not even the coronavirus pandemic could slow down this bustling housing market. And those underlying forces remain intact in 2021. In fact, the inventory situation has gotten even tighter over the past year or so.
According to the report mentioned above, the total number of active real estate listings within the Denver metro housing market declined by -57% from April 2020 into April 2021. And supply levels were already low a year ago. So what we have here is a tight housing market that’s become even more constrained over the past year, as more home buyers move into the area.
As of spring 2021, the Denver, Colorado real estate market also has a high percentage of homes sold above the original list price. This too points to a red-hot housing scene with stiff competition among buyers. Multiple-offer scenarios are common, as buyers attempt to outfox one another.
But there may be a light at the end of the tunnel, for buyers struggling to find a home in the Denver area real estate market. While total active real estate listings have declined over the past year, new listings increased by 59% in April 2021. This means there are more new listings popping up today than there were a year ago.
So we could be witnessing the start of a positive trend, from an inventory standpoint. If more homes come onto the market going forward, home buyers could have an easier time finding a property. This trend could help balance the Denver real estate market at a time when such balance is sorely lacking.
A Strong Home-Price Forecast For the Denver Area
Given all of the trends outlined above, it shouldn’t surprise you that home prices in the Denver area have risen steadily over the past year. And housing market forecasts predict more of the same going forward.
According to the real estate data company Zillow, the median home value within the Denver-Aurora metro area rose by around 11.3% over the past year. Looking forward, the company predicts that home values will rise by 11.6% over the next 12 months. (This housing market forecast for Denver was issued in late April 2021. So it extends into the spring of 2022.)
Home values in the area have risen substantially over the past 10 years or so. Consider the evidence:
- As of May 2021, the median home price within the Denver metro area was around $520,000.
- Ten years ago, the median price point was around $236,000.
This means home prices within the Denver area housing market have more than doubled over the past decade. What used to be a relatively affordable real estate market is rapidly becoming unaffordable for a growing number of local residents.
This is a pattern we have seen in other major cities across the country, most notably within the Seattle area. If the Denver housing market continues to experience such rapid price growth, more and more home buyers in the area will get “priced out.”
Steady Population Growth Adds Fuel to the Fire
We’ve covered the supply side of the Denver real estate market in 2021. Despite a recent uptick in new property listings, total housing inventory remains very low from a historical standpoint. There just aren’t enough homes on the market to satisfy the demand from buyers. It’s not even close.
And that demand appears to be rising as well. Home sales activity has increased over the past year or so, largely as a result of steady population growth.
According to the U.S. Census Bureau, the population within the city of Denver grew by more than 20% from 2010 to 2019. The city’s population was north of 700,000 residents when last measured. The broader metro area is now home to around 3 million residents. And those numbers continue to climb.
Given the tight supply conditions and growing population, home prices in the area will likely continue to climb for the foreseeable future. So it’s no surprise to see positive real estate market forecasts for Denver and the surrounding area, extending into 2022.
Disclaimer: This report contains predictions, forecasts, and other forward-looking views provided by third parties not associated with the publisher. Real estate predictions are the equivalent of an educated guess and should be treated as such. The Home Buying Institute makes no claims about future housing or economic conditions.