According to the latest Market Trends Report released early this month, the Denver housing market started the year with a record-breaking yearly real estate appreciation due to the negative imbalance between demand and supply.
The median home closed price for a single-family home in this market spiked by 2.9% in January and resulted in an annual home price appreciation pace of 18.7%.
At a selling price of $629,159, this increase only displays the growing superiority of highly-priced homes in what’s currently available for home buyers throughout the city.
In January alone, approximately 70% extra homes sold at $1 million and above, 45.4% fewer homes sold for less than $300,000, and those that sold in the $400,000 market range dropped by 11.2%.
The median home price value in Denver for single-family properties averaged $510,000. That’s close to a 1.3% rise over December and about 10.9% up from January 2020.
Just like 2018, 2021 is the second year for Denver to record a double-digit median home price increase at the start of the year.
The median closing price for condominiums and townhouses in the Denver housing market was $339,000, and most of them closed at $397,792. This difference portrays that both the average home price and the median closing price increased by a monthly rate of 2.5% and 2.7%.
These rates equate to a yearly increase of 11.7% and 11.5% for the average home price and median closing price.
According to the Denver Metro Association of Realtors (DMAR), the rising interest for more space coupled with record-low interest rates will continue driving demand even as overall active inventory drops to historic levels.
Active listings and home sales
The number of active listings through January in Denver were 2,316, accounting for a year-over-year drop of 8.9%. This decrease means that home buyers in the Denver housing market had nearly less than half the number of properties available to choose from compared to January 2020.
New listings for single-family homes throughout Denver declined by 14.5% over the year, while that for condominiums dropped by 10.6%.
The number of closed home sales amounted to about 3,015 properties, accounting for a month-to-month decline of 42% and a year-over-year drop of 10.3%.
The number of homes under contracts (pending sales) is closely trailing last year’s averages and is holding up well so far.
The overall decline in home sales generally attributes to the general lack of new listings for buyers, especially those looking to benefit from the low mortgage interest rates.
Real estate economists now believe that these rates will bounce back to their original range of 2.9% to 3.4%.
Despite the general expectation that this change would compromise affordability, it isn’t expected to derail the market so much.
Rental market recap
Even though the pandemic flattened overall rent gains, Denver recorded zero surges in vacancy rates in 2020. The Apartment Association of Metro Denver reported that last year’s rent growth was the slowest in 12 years.
The average rent for an apartment in Denver increased to $1,510, accounting for at least a 0.5% increase in rent prices in the final quarter of 2020. The median rent price in Denver last year dropped to $1,449 from 1,457 in 2019.
The Colorado Economic Management Associates and the University of Denver’s Daniels College of Business’ rent survey report conclude this is
the second time for Denver to experience a soft slip in rent since the Great Recession in 2008.
Despite Denver’s overall spike in unemployment rates to over 12%, missed rent payments never reached the predicted levels. The current unemployment rate is 3.8%, and Real Page data indicates that rent collection throughout the city stabilized at about 93.5% in January.
According to rate.com, the Denver rental market accounts for a homeowner vacancy rate of 0.9% and a rental vacancy rate of 4.4% among its population of 678,467 and 306,714 housing units.
The CBRE ranking
According to the latest report from CBRE, an American commercial real estate service provider, Denver overall ranked 6th out of 50 most popular metro areas in the nation for developmental prospects. Denver is listed as the third city with the most number of opportunities for multifamily residential housing.
The CBRE rankings accounted for construction costs, overall market performance, factors underpinning housing supply, market strength over the past financial cycle, and future predictions.
The 2021 Denver housing market expects to record a rise in tenant-fit-out housing projects. As employees continue to reconfigure the use of space, job markets in Denver are expected to grow by 5.4% in the next three years.