As we slowly return to some sense of normalcy after the economic shutdown, the Denver real estate market continues to scream along. Through the height of the pandemic, home sales slowed but never stopped. As soon as the Stay-At-Home order was lifted, Denver real estate sales took off for a wild ride.
The 2020 Spring buying season was interrupted by the Covid-19 shut-down. Home sales typically surge in April and taper off at the end of the summer. This year has clearly been different. The selling season started late and has continued strong into the Fall. Some reports suggest home sales will remain high to the end of the year.
Like a flashback to 2015, we are sitting in the middle of a seller’s market with buyers battling over the limited inventory. While sellers maintain control of the market, prices continue to rise, and buyers contend with the frustration of competing for a limited number of available homes.
What’s the difference between today and five years ago?
Denver’s population has been on the rise for several years. The climate and weather are tough to beat. Sunshine for more than 300 days of the year and the incredible Rocky Mountains, full of beauty and recreation, offer a myriad of reasons to come here and stay. With all of the positive aspects that Denver has going for it, it’s no surprise we’ve seen a constant increase in the population.
Starting in 2013 the economy was picking up and for several years Denver was one of the top cities to live in. With the sudden influx of new residents, builders were caught flat and were well behind the curve in keeping up with the housing demand.
Today, the combination of the pandemic and social unrest has people on the move again with Colorado being one of the preferred destinations. This influx of new residents is finding more new construction available, but fewer existing homes for sale. In September there were 5,120 single family homes listed in the Denver Metro area, half of the 10,714 available a year ago during the same time period.
Prices Go Up, Interest Rates Come Down
The other contributing factor to the buyer demand are the historically low interest rates. As prices continue to rise with the demand for housing, the falling interest rates have helped to keep home prices in an affordable range. There seems to be no hint that interest rates will rise, maintaining the unprecedented low rates for another year or more. In fact, it has been predicted that rates could possibly take another slight dip.
Home prices have continued to increase, setting new records in Denver. The medium price for a single family residence is now $493,250, a 14.4% increase from this time last year. As long as the demand for homes continues, prices will stay strong.
As real estate prices climb, Denver faces an increasing affordability issue. Colorado used to be the affordable alternative to the East and West coasts. While we have net population gain, affordability is one of the top issues and a leading factor in reasons residents leave the state. Buyer demand is what is currently keeping home prices at these levels, and pushing them even higher. Looking ahead, when the buyer demand subsides, home prices will almost assuredly level off and retreat. Given the current conditions, and with no additional pandemic surprises, January 2021 could reset and see the return to the normal real estate season.