Like any other housing market, the Denver residential market couldn’t avert the COVID-19 downturn effects despite its overall remarkable performance amid the pandemic.
Unemployment rates in Denver escalated by more than 12% during the pandemic while that of the nation rose past 14%. This general insulation to the pandemic immensely contributed to the 2020 real estate boom experienced in Denver.
Foreclosure trends in Denver
Foreclosure rates even before the pandemic were generally lower in the mile-high city relative to that of the entire nation. The 1.2% foreclosure rate back then only meant that Denver had one distressed home out of a group of 8,407 units.
According to RealtyTrac reports, the number of foreclosure filings for properties across Denver dropped by a month-over-month pace of 68%. This decline also equated to about a 90% decrease from a year ago.
Denver’s distressed inventories at this time mainly consisted of properties listed for auction. With home stock dropping by slightly more than 71% in May 2020, a home listed for auction contributed to more than 86% of the total foreclosures at the time.
The remaining 13.6% purely consisted of bank-owned properties that didn’t sell during an auction.
RealtyTrac recently filed that the Denver real estate market had a 16.7% month-to-month decrease in foreclosure rates throughout February. This rate considerably equates to about a 92% drop compared to a year ago.
How to make the most of foreclosure
Given the current competitive bidding wars and escalated home prices, home investors should consider going to property auctions for great discounts. Visiting these sources will typically increase your chances of getting a good deal at reduced prices.
Despite the negative trend in foreclosure rates at the moment, it’s worth noting that the uncertainties of the current pandemic might potentially cause an increase indefinitely. The looming economic downturn will mainly decrease most homeowners’ ability to meet their regular mortgage payments, causing widespread distress later in the year once forbearance programs come to an end.
Median home price overview
Despite the general assumption that the current home value prices aren’t reflective enough, the current Zillow home value index for Denver is $496,944. About ten years ago, this figure dropped nearly by half and averaged at $232,000 in June 2011.
Several different positive indicators had come to play over the years for this housing market to reach where it is today, at 100%+ in terms of median home value. To put things into perspective, Zillow estimates that the home value for the entire nation only grew by nearly 53%, and it’s now at $272,446.
Both homeowners and aspiring home investors should note that the decade-long appreciation in home value is a valuable sign of high returns. Despite the overall counterbalance experienced in 2019, home price prediction models suggest that the current price escalations might continue into the second half of 2021.
Zillow’s home price predictions for the Denver housing market indicate a yearly rise of more than 13% in the coming year. Home prices predictions for the American home market will grow by 11.4% by February 2022.
What to expect
It’s apparent that coronavirus effects were significantly severe during the spring months, and many aren’t sure how things might play out this year. Equipped with knowledge about the disease and the current uptake of COVID-19 vaccines, real estate analysis are hopeful that the Denver housing market will maintain the current status quo at the very least.
With most pandemic-related property bailouts set to come to an end this summer, buyers’ confidence could downshift a little as mortgage rates increase later in the year. According to the National Association of Home builders, new constructions might continue stalling due to the unexpected rise in building materials throughout the country.
This slow progress will consequently choke supply for new listings and cause overheated home prices going into the second quarter of 2021.
Other models predict that Denver home prices might decrease by 1.7% by mid-spring to balance out the 12-month price build-up. From a different perspective, home prices will generally remain high until when home builders will efficiently match the current rise in demand for housing.
With a general lack of supply of new listings to an already suffocating inventory, it’s safe to conclude that competition will toughen even further as home prices escalate to record-breaking levels.