The Denver Metro Association of Realtors (DMAR) recent update highlights how the Denver real estate market ended in 2020 with a bang. The historic high number of home sales throughout metro Denver and the record-low inventories were the two main traits for this particular house market.
Despite the deadly coronavirus pandemic and the looming economic downturn, home activities remained robust in the Denver housing market.
A sum of 4,807 housing units was sold in December, adding to the 62,985 properties sold in 2020. Besides the minute listings, the December sales increased the year-over-year home sales by nearly 7% from 2019.
Available listings at the end of 2019 closed at 2,541, a 25.6% drop from November and about 50% decline from a year ago. This magnitude was the first time that DMAR ever recorded a decrease of less than 3,000 home listings since its establishment.
This data suggests that homebuyers in Denver had about a fifth of the 12,941 listings averaged for all Decembers since 1985. The many that were left empty-handed started 2021 with the hope that home supplies will increase.
The Decemberhousing market activities
The median property price for a single-family house was $507,000 last month, marking a 0.6% decline from November and a 12.9% increase from December 2019. Condominiums and other similar dwellings sold at an average price of $332,000, a 1% decrease from a month ago but 7.1% up on the year.
The National Association of Realtors’ economist claims in the report that despite the overall staggering feeling for potential buyers and a 13% home price increase, the current record-low mortgage rates by the Federal Reserve have made home payments more affordable.
This claim means that the only big problem right now for most home hunters is to find something to buy, now that they are still able to afford them.
During a recession, home sales in the luxury market segment for properties priced more than $1 million always take the biggest hit due to limited demand. But this isn’t what happened in Denver last year.
High-end properties recorded a 34.8% surge in home sales in December alone as more people continued seeking additional space in less crowded cities. This new buying pattern reduced buyer interest in the attached home types like townhouses, especially in the densely populated neighborhoods.
The average price gain for condos across Denver upped slightly above half the rare seen for single-family detached homes, and its listings spent 50% more days before being bought in December.
What to expect in the coming months
The year 2020 taught us that making housing market predictions is sometimes close to impossible. With too many variables to consider, sometimes the unexpected always happens. To improve our projections for this year, we’ll consider looking at the appreciation trends in home prices.
According to Zillow, property prices in Denver increased to $484,264 from $233,000. This increase equates to an up of nearly 108% since 2012.
Despite contributing to the current spikes in real estate value, Denver’s strong economy is seemingly increasing buyers’ purchase power.
In 7 years, home prices increased so much for individuals with a median income to afford a place of their own in Denver. All these changed in 2019 when this local housing market recorded a home price appreciation pace of 1%, and the year closed with a home value of $486,695.
This cooling trend brought the median home value to $420,000, marking less than 3% up from 2018.
The current Zillow Buyer-Seller Index indicates that the Denver housing market is still a seller’s market, meaning that demand exceeds supply. It’s a seller’s market because sellers have an advantage during price negotiations over buyers.
Even though the Denver housing market has fewer homes for sale than the number of active buyers, it cumulatively has a yearly real estate appreciation rate of 7.49%.
Prices appreciated by almost 4% in the last 12 months and 1.79% in 2020’s final quarter.
If nothing changes and the status quo remains constant, the annualized appreciation estimate will probably average at 7.35%. This estimate corroborates with Zillow’s projections, and we should expect home values in Denver to rise between 7% and 10% by the end of the year.
The 2021 forecasts for the Denver housing market mostly predicts that the market will continue seeing a spike in home prices for the next twelve months due to the current shortage of new home supply and the increasing demand for housing.
Mortgage rates will continue being low for a better part of the year, meaning that we should expect a boost in the home buying market.
Since it will generally be a seller’s market, this is the opportune time to put that home on sale because the prices are high and attractive. For more insights, reach out to our verified property managers now.