The Denver housing market is increasingly hot by the day. The median home price for an average single-family home is now at $580,000. Aside from being the new high throughout the region, asking prices are way overpriced than anywhere else in the nation.
The average stay period for most listings throughout the Denver-Aurora area was 15 days at the start of this month. A year ago, this average was at around 34 days.
The Denver housing market is highly unsustainable, now that there are only 2,000 housing units left for sale. Affordable housing is quickly diminishing throughout Denver, and it’s altering local neighborhood structures by forcing out those who can’t afford it.
Low mortgage rates continue to power most housing markets, as the national mortgage rate range around 3.13%. These historical averages offer low-income families and individuals the chance to secure their place at incredibly low-interest rates.
One indirect effect of the pandemic that we might continue seeing into the next half of 2021 is the influx of new residents. Migration records show that Colorado is increasingly getting more out-of-state residents, mainly from the east and west coasts.
When you compare the cost of living between the two destinations, the current home prices start to make sense. Other factors contributing to higher house prices include high demands and limited supplies.
Away from the inventory struggles, gentrification is quickly taking center stage. The Mile High City currently ranks 2nd for gentrification in America. This new drift coupled with the increase in home prices continues to push lower-income families out of local neighborhoods as more affluent buyers flock to the area.
When it comes to rentals, landlords can easily change the usual rates to match the new social structure, creating more trouble for low-income tenants. The average rent price for an 842 sq. ft. apartment is $1,661 in Denver.
According to RENTCafé statistics, this rate accounts for a 0% year-over-year change.
Home price overview
With no foreseeable calm, the median home price trends might continue skewing less as home sales increase. The latest data from the National Association of Realtors (NAR) indicates that the national median home sale price for a single-family property was $334,500 in March. Besides the disparity between home prices with geo-specific markets such as the Denver housing market, Colorado’s home price appreciation pace closely matches the national average.
Single-family home values throughout the state have a measured median sales price that’s 50% more than that for the nation in general.
According to NerdWallet’s mortgage qualification calculator, last month’s buyers required at least $100,000 annual revenue and a 10% deposit to buy a moderate property in Colorado. Things are much worse in metro Denver, where median home prices are close to $600,000, making affordability a primary concern.
NAR tracks list Denver as the 14th metro area with the highest median single-family home prices in the nation.
The question of affordability
The effects of lower interest rates usually cancel out with home appreciation rates. In Denver, median home prices for detached single-family properties grew at an annual pace of 15.46% by April 2021.
One year ago, the growth rate was 8.43%.
Low mortgage rates are good at minimizing the risk of having an affordability crunch throughout Denver, but gentrification seems to be posing a new threat. According to Freddie Mac records, the average mortgage rate for a 30-year fixed property in Denver was about 3.45% at the start of April.
Current mortgage rates for similar fixed mortgage conditions are 3.125% throughout Colorado, but it isn’t enough to slow down the ever-soaring prices.
Acute inventory shortages, piping hot home prices, and an influx of more affluent residents are some of the main factors projected to continue impacting affordability in Denver moving forward.
According to current data from Realtor.com, Denver has 5727 active listings and a median list price of $509,850.
The final word
The Denver housing market isn’t showing any signs of slowing down its momentum any time soon. With more people still coming in from other metro areas, gentrification levels will inevitably increase and increase the pressure on affordability. Despite it being hard to predict future market behavior, the city should revamp its local housing regulation strategies to avoid denting equal housing opportunities. For more market insights and personalized property management help, call (720) 724-9794 or email your query to firstname.lastname@example.org.