Could the Denver real estate market be in favor of buyers or sellers in 2023? According to the Denver Metro Association of Realtors, the Denver housing market is tight if you're a buyer. There aren't as many properties to purchase, so it's hard for homebuyers to find something that meets their needs.
Today, you'll learn more about the Denver real estate market and its progress. We'll discuss the lack of for-sale inventory, which has led to higher home prices with fewer sales. Then, you'll learn how the rental market is growing, which is excellent news for investors.
Denver Housing Market Trends
Right now, the number of for-sale listings is pretty low. The region saw the supply of housing dip to about 1.9 months, which is lower than the national average (3.2 months).
Shockingly, that lower supply for the Denver housing market has increased compared to last year. At the end of 2022, supply was at 0.43.
It appears that fewer homeowners are selling, and this could be because of rising mortgage rates and high interest rates. In fact, refinancing was under five percent. When you sell and have a 3.5 percent mortgage, you could raise your mortgage rates to over six percent. That extra cost burdens homeowners.
Factors Affecting the Denver Housing Market
Here are a few factors that will continue affecting the Denver housing market in 2023 and beyond:
Months of Supply and Inventory
April 2023 saw home listings at 29 percent lower than last year. There are fewer listings than in the past 12 years. Therefore, standing inventory is 166 percent higher than in April 2022. This means there are more active listings for sale by the end of each month. Likewise, days on market was about eight days, which is double from last year.
Home Sales in Denver
There were 26 percent fewer closings in Denver, CO, in April of 2023 than there were last year. Likewise, the median closing price is up from 2022 to $616,500. While there was more buyer activity, higher interest rates and less inventory saw a decrease in closings.
Median Home Price in Denver
The median home price for a home in downtown Denver was about seven percent lower than in April of 2022. However, that's 10 percent higher from the previous year of 2021. Generally, home prices are solid because there's no inventory and a high demand. Likewise, home prices are high, even with the seven percent year-over-year decline.
Days on Market
In the Mile High City, it took a real estate agent twice as long to execute a contract compared to the previous year. In fact, homes were only on the market for eight days and saw home prices lowered, as well.
Overall, April 2023 saw an increase of 58 percent in properties being leased. The median sale price is about seven percent higher, and single-family homes lead the way with 57 percent.
Generally, the average rent for one-bedroom apartments in Denver is sitting at $1,758, which hasn't increased from last year. Likewise, studio apartments have declined steadily by one percent.
It's possible to get a good median sale price in the Mile High City, but it's not easy. You'll likely want to speak with a real estate agent if you want to be in the Denver metro area.
Will the Housing Market Crash in Denver?
With the median sale price of $536,500 in January showing a decrease from previous months, it's easy to see that the Denver housing market is slightly stagnant. Home sales aren't prevalent because people don't want to leave. This leads the housing inventory to be quite low in the Denver metro area.
However, the Denver market is a good long-term investment because of the strong economy. The unemployment rate is only at three percent, which is down from one year ago.
Overall, the US Bureau of Labor Statistics indicates that there are fewer people not working, and most of the population in the Denver metro area will rent. This is excellent if you wish to purchase a rental property in Denver.
However, 2023 will likely be difficult for the real estate market. Sellers and buyers will surely face uncertainty when determining if they should bite the bullet. Therefore, the economy will need to recover, and that hasn't happened in May. Still, housing will likely stabilize throughout the coming months.
Denver Housing Market Statistics
Are you interested in learning about statistics for the Denver housing market? Here's what you should know:
- The median sale price for a Denver metro area home is about $584,000, which is up by 46.2 percent in the last five years. In 2017, the median sale price was only $399,504.
- Overall, home prices for the Denver metro area peaked in 2022, so the median sale prices were around $615,000. However, there have been gradual declines through February 2023, so home prices are sitting at $560,000.
- The Denver metro area has seen home prices stay historically high. In one year, the median sale prices increased by about $100,000.
- Home sales are strong when they do happen. In 2022, over 63 percent sold above the list price. However, February 2023 saw that percentage fall to 27.5 percent for home sales above the list price.
Housing Market Predictions
Mortgage rates continue to be high, so home prices and sales are hitting the brakes. Likewise, most homeowners, buyers, and sellers are nervous. In May, a 30-year fixed mortgage rate was about 6.52 percent. Likewise, inflation is a huge problem, causing the Federal Reserve to raise rates 10 times in a row.
Industry experts do have different projections for the overall housing market. Still, sales activity, supply, and buyer competition are all much lower now than in the same period the past year.
Denver Housing Market Predictions
The Denver housing market should remain strong because of the low inventory and low unemployment rates. However, that could be problematic for landlords because they might not get lower prices or be sucked into bidding wars to get what they want.
Prices and home values should stay where they are in the housing market because of the low inventory.
If you're a landlord who wants to break into the real estate market, it's wise to stay updated on new listings and focus on the best neighborhoods. You may spend more for a typical home, but you'll likely recoup that amount in the same time frame.
Overall, the housing market is solid for sellers, with homes sold quickly and for the listing price. Unless more supply springs up, bidding wars are likely to ensue.
Where in Denver Can You Get the Best Value?
Understanding how much you can afford is crucial when determining if real estate is the best investment option. Prices will vary significantly in the Denver area. Though the median price for Douglas County started out at $685,000 this year, Aurora saw prices of $490,000.
Though real estate is sure to continue thriving in the long term, the Denver metro area is also expensive. The cost of living is similar to that on the West Coast, so you may have to lower rent to keep tenants. Still, you'll recoup your money quickly.
What Are the Most Popular Neighborhoods to Consider?
If you want to fill your rentals with young professionals, the River North Arts District, Five Points, and South Broadway are all suitable options. There are plenty of music venues, breweries, and restaurants.
Washington Park is excellent for green space, and Cherry Creek is ideal for a suburb-like ambiance.