The Denver housing market has drastically changed over the last ten years. According to data collected by the Denver Metro Association of Realtors (DMAR), the average sale price of a property in the Denver housing market in 2010 was $259,084 compared to an average sale price of $465,000 last month.
Reasons behind the drastic home price increases throughout Denver
Increase in demand and inventory shortages
The Denver housing market has been experiencing low inventories since 2011, right after the Great Recession. This housing market is now experiencing a robust buyer demand that’s causing properties to sell faster and home prices to escalate to historic-levels. An average listing now receives more than three offers and sells after 13 days. DMAR records show that Denver had 11,839 homes for sale by the end of 1990, and there were only 2,541 properties left for sale last month. The increase in buyer competition throughout 2020 heavily dented the supply of available properties. Home builders are reportedly struggling to keep up with the intensified demand for housing across Mile-High City.
A favorable economy and desirable lifestyle
Denver has been widely famous for its relatively low unemployment rates, a steady economy, and a favorable lifestyle throughout the last decade. Unemployment rates here were 7.4% last year, and this rate was an increase from 2.7% in 2019.
Ranked as the fifth fastest-growing city in the U.S., Denver has been a top destination for many new companies relocating from highly populated cities like New York. With the social distancing regulations, Denver’s abundance of open space and plenty of sunshine is more appealing now than ever.
Denver has a below-average property crime rate of 45 cases per 1,000 locals, strengthening its neighborhood character. The average effective property tax rate throughout Denver County is 0.50% for a median home value of $357,300.
Both sales and income tax rates in Denver this year are 4.81% and 4.63%. Data from the U.S. Census Bureau indicate that Denver has a median individual income of $68,399 and a median household income of $87,088.
These figures are nearly double the national average, suggesting that Denver continued to offer better life quality than most similar destinations throughout the past decade. The more desirable Denver becomes, the more its housing demand grows and eventually puts pressure on home prices.
Population influx and the ability to work from home
As we grapple with the pandemic’s effects in the housing market, Denver has considerably grown to become a top work-from-home destination. According to a report by Flex Jobs in 2020, 8.2% of the workforce in Denver comprises remote workers.
The report further ranked Denver’s statistics as the third-highest, right after Broomfield (9.4%) and Boulder (14.9%). Approximately 6.3% of the workforce in 2010 comprised of remote workers.
Besides being a telecommuter-friendly city, this was the only decade that Denver recorded the highest number of people relocating from other major destinations in the nation. Immigration data from the U.S. Census Bureau indicates that the number of people who relocated to Denver right after the Great Recession (2009-2010) was 21,436. A more recent report ranked Denver’s inbound growth rate as the fifth-highest and also highlighted that Colorado gained an average of 760,000 people since 2010.
Ranked as Colorado’s second-best city to live in by the U.S. News & World Report, Denver’s inbound immigration rate between April and October last year was approximately 1.34%. This growth subsequently increased pressure on available listings, leading to inventory shortages and gains in home prices.
The incredibly low mortgage interest rates
One of the marked effects of COVID-19 on the housing market was that it led to historically low mortgage interest rates throughout the nation. These reductions were to encourage more home buyers to get into various housing markets in America.
The average mortgage interest rate over last year ranged at levels below the usual 3%. This drop helped by weighing down huge monthly mortgage payments because of rising home prices.
As a rule of thumb, a 0.5% decrease in the local interest rates cuts down monthly mortgage payments by at least $100. The current mortgage interest rate in Denver is 2.90% for a 30-year fixed plan. The median home value in Denver is $414,400.