Norada Real Estate Investments

Denver Housing Market: Prices, Trends, Forecast 2022-2023

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Is the Housing Market Slowing in Denver?

Is the Denver housing market moving in favor of buyers in 2022? As the Denver Metro Housing Market continues to evolve, this blog will keep you up-to-date. The market stats for September indicate that the Denver housing market is no longer in flux. The real estate market has become more balanced, according to DMAR.

The Denver housing market is shifting to a balanced market. Home prices will either remain stable or fall. As economic uncertainty keeps some buyers at home, the market is becoming more balanced. All significant statistical indicators point to a market slowdown in the Denver area. A market with three to six months of inventory is considered balanced. A market with more than six months of inventory is considered a buyer's market.

Currently, the $100,000 to $199,999 and $1 million and above segments for detached homes are nearing the 3 months threshold, with 2.75 and 2.62 months, respectively. Attached homes priced at $1 million or more have 2.83 months of inventory. Using months of inventory as a metric indicates that the Denver metropolitan area is approaching towards a balanced real estate market.

Buyers can now find the proper house and negotiate the purchase price, inspection-related fixes, and appraisal values. Some purchasers are adjusting to increasing borrowing rates and using market tools. Active listings at month's end (September) grew 10.72 percent to 7,683. Pending sales for detached and attached homes fell 15.41% month-over-month, resulting in a 6.38% sales volume fall.

<<<READ: Colorado housing market forecast & trends>>>

According to DMAR's Luxury Market Report (properties sold for $1 million or greater) now has the highest months of inventory for any part of the Denver market, with 2.73 months of homes for sale. Luxury homebuyers have more time to decide. Both detached and attached markets experienced an increase in average MLS days from August, 31.82 percent for detached and 40% for attached. Pending sales for detached houses dropped 16.35% in September and 8.33% for attached. Close-price-to-list-price ratios fell below 100% again this month, to 98.21% for detached and 99.30% for attached.

Are Denver Home Prices Dropping in 2022?

Denver Housing Market's Quarterly House Price Appreciation: The FHFA House Price Index (FHFA HPI®) is an indicator of typical house price inflation in the United States. It is a broad measure of the movement of single-family house prices at various geographic levels. It indicates that home prices increased by 21.6 percent in the Denver-Aurora-Lakewood Metropolitan Statistical Area over the past year. Prices also rose 7.5 percent over the last quarter (as of 2022 Q1).

The Denver Metro Association of REALTORS® (DMAR) published its September Market Trends Report which demonstrated that the home price rise last month represents the highest September on record. Denver's real estate market is expected to operate in a more balanced way than it did at the beginning of the year.

Metropolitan Statistical Area (MSA) reports show housing market statistics that focus on the Denver metro region with a relatively high population density at its core and close economic ties throughout the area. It includes Greater Denver Metro Area Counties: Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park. Here are the numbers for July 2022 compared with July 2021.

Median Home Price in Denver 2022

  • (Residential) $580,000 represents the highest September on record. The previous record was 2021 at $530,000.
  • (Detached) $632,000 represents the highest September on record. The previous record was 2021 at $576,000.
  • (Attached) $410,000 represents the highest September on record. The previous record was 2021 at $380,000.

Average Home Price in Denver 2022

  • (Residential) $671,024 represents the highest September on record. The previous record high was 2021 at $618,977.
  • (Detached) $745,947 represents the highest September on record. The previous record high was 2021 at $690,541.
  • (Attached) $486,773 represents the highest September on record. The previous record high was 2021 at $443,847.

As of October 05, 2022, the average rent for a 1-bedroom apartment in Denver, CO is $1,725. This is a 0% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Denver decreased by -2% to $1,455. The average rent for a 1-bedroom apartment increased by 2% to $1,725, and the average rent for a 2-bedroom apartment decreased by -2% to $2,295.

  • The average rent for a two-bedroom apartment in Denver is $2,295, a 4 percent rise over the previous year.
  • The average rent for a three-bedroom apartment in Denver is $2,800, a 7 percent rise over the previous year.
  • The average rent for a four-bedroom apartment in Denver is $3,000, a 3 percent rise over the previous year.
Denver Real Estate Market
Data by DMAR. Forecast from multiple sources.

Denver Market Trends Showing Month-Over-Month %Change

Denver housing market trends
Source: DMAR

Denver Housing Market Forecast 2022 and 2023

The Denver real estate market predictions for 2022 & 2023. Interest rates remained low and buyer demand remained consistently high throughout 2021. According to DMAR, more homes were purchased last year, totaling 63,684, than in any previous year. While demand was at an all-time high, new listings on the market fell 5.26 percent throughout the year.

At the start of January 2022, the Denver Metro area had only 1,477 active properties on the market, which is 11,175 fewer than normal. Due to sustained demand for housing and a lack of inventory, the market is expected to experience double-digit appreciation in 2022. It will be the first time since 2015-2016 and 1998-2000 when Denver saw back-to-back years of double-digit appreciation.

Denver has a track record of being one of the best long-term real estate investments in the U.S. Let us look at the home price appreciation trends recorded by Zillow over the past few years. Denver's strong economy gives buyers the ability to spend more on housing, consequently increasing real estate prices.

Home values rose so much over the past six or seven years that affordability became an issue for a person earning the median income in this area. But in 2019, it experienced a cooling trend where home values appreciated by a mere 1%. The year ended with an average home price of $486,695 and a median of $420,000. This was up less than three percent from 2018, but up almost 90 percent from 2010.

Since the last decade (September 2012), the Denver-Aurora-Lakewood Metro home values have appreciated by nearly 160% — Zillow Home Value Index. The typical home value of homes in the Denver metro is currently $629,632. It indicates that 50 percent of all housing stock in the area is worth more than $629,632 and 50 percent is worth less (adjusting for seasonal fluctuations).

In Aug 2021, the typical value of homes in Denver City was around $553,000. Home values have gone up 13.7% since then. Denver is currently a moderate seller's real estate market.

Similar growth has been recorded by NeighborhoodScout.com as their data also shows that in the past 10 years Denver real estate appreciated by nearly 146.94%. This amounts to an annual real estate appreciation of 9.46%, which puts Denver in the top 10% nationally for real estate appreciation.

Here is the latest housing forecast for the Denver MSA. Denver could become a buyer’s market by mid-2023. It is now a neutral market with prices getting softer. The second half of the year is seeing a return to normalization. Higher interest rates are already translating to more inventory, lower or flat prices, and longer days in the MLS.

  • Denver-Aurora-Lakewood Metro home values have gone up 13.7% over the past year.
  • Zillow forecasts that Denver home values are expected to rise by 0.5% between August 2022 to August 2023.
  • Denver home values have gone up 13.8% over the past year.
  • Aurora home values have gone up 13.9% over the past year.
  • Lakewood home values have gone up 11.9% over the past year.
  • The typical value of homes in Colorado (statewide) is currently holding at $580,275.
  • Colorado home values have gone up 14.7% over the past year and will continue to rise in the next twelve months.
Denver housing market predictions
Credits: Zillow.com

In conclusion, we can say that these numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? Denver Metro Area is still a seller’s market across the board but the historically low mortgage interest rates did help buyers as far as housing affordability is concerned.

In a balanced real estate market, it would take about six months for the supply to dwindle to zero. In terms of months of supply, Denver can become a buyer's real estate market if the supply increases to more than six months of inventory. Months Supply of Inventory in the metro Denver housing market is still low as compared to a glut of buyers. However, it is shifting towards a more balanced housing market in 2022 & 2023.

Nationally, the houisng market is also cooling off from its pandemic-induced peak. The National Association of Realtors says home sales fell in June 2022, the fifth consecutive month of declining sales volumes. And while the national median home price in June hit $416,000 — yet another record — the pace of annual appreciation decelerated to 13 percent

Is Denver a Good Place to Invest in Real Estate in 2022?

Should you consider Denver real estate investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2022 and 2023. Denver is ranked as the country's 16th-most walkable city, with 600,158 residents. It has some public transportation and is very bikeable. Downtown is the most walkable neighborhood in Denver with a Walk Score of 93.

As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached are the most common housing units in Denver. Other types of housing that are prevalent in Denver include large apartment complexes, duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 40-45% of Denver's housing units.

Denver ranked 13th for overall real estate investment and development, according to some 3,000 industry professionals surveyed and interviewed by the Urban Land Institute and PwC. Survey respondents viewed Denver's housing market even more favorably, collectively ranking it ninth overall.

Of greater importance to real estate investors in Denver is that the area is growing in population. The jobs are increasing and so are the number of renters. It is the largest and capital city of Colorado, home to roughly 700,000 people. The Denver metropolitan area is home to around 2.7 million people. The population has increased by 1.33% from 2019. The Denver-Aurora, Colorado statistical area is home to about three and a half million people.

It has a low unemployment rate of 3% unchanged from 3.30 last month and down from 6.70% one year ago, according to the U.S. Bureau of Labor Statistics. A third of the population of the Denver metro area rents. All these are excellent signs of investors looking to buy a rental property in Denver. Despite the recent cooling off, there are several reasons to consider a long-term investment in the Denver real estate market.

Shortage of housing for a growing population, a strong economy & increasing jobs have been fueling the demand in the Denver housing market for the past many years. Denver is a key trade point for the country, and home to several large corporations in the central United States. It was named 6th on Forbes Magazine’s “Best Places for Business and Careers.” Denver South is home to 7 Fortune 500 companies. It is also home to mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy.

Let’s take a look at the number of positive things going on in the Denver real estate market which can help investors who are keen to buy an investment property in this city. We’ll address the biggest factor pulling people to the Denver housing market next.

How Was the Housing Market in Denver Last Year?

Two numbers stood out most: low inventory and skyrocketing prices. The lack of supply, combined with strong demand, drove record price gains. In 2021, the Denver metro averaged $612,274, a 16.68 percent gain over 2020. Prices reached a new all-time high and represented the tenth consecutive year of upward growth. The previous high point for percentage growth occurred in 2000 when it reached 15.77 percent. Those that followed the median price rise saw a 16.67 percent increase in 2021, nearly equal to the change in the average closed price.

Months of inventory (or MOD) is another strong indicator of market direction because it takes both active and closed listings into account. MOI was 0.56 on an annual average basis in 2021. A new record low, surpassing 2020's MOI of 1.21. 2012 was the last year in which Denver averaged greater than 2.0 MOI. The traditional period of four to five months is no longer adequate in light of current trends. As we settle into the new normal, the present market is heavily skewed in favor of the house seller.

Based on the market's sustained demand for housing and a lack of inventory, the market is expected to appreciate by double digits in 2022, which it hasn't seen in back-to-back years since 2015-2016 and 1998-2000. According to DMAR, there are a few elements that will determine if house prices continue to accelerate. The first consideration is supply and demand. At the start of January 2022, there are 41.87 percent fewer residences on the market than there were in January 2021.

The second aspect is that conforming loan ceilings in the Denver metro area increased to $684,250. This is $37,050 more than the applicable national conforming limits. This indicates that the majority of purchasers may acquire a $750,000 property with a 10% down payment without incurring a large loan. However, forecasts for the next year are divided between those who believe that already high prices and rising mortgage rates will price many buyers out of the market and those who believe that limited supply will fuel another year of double-digit price growth.

The median price of a single-family home sold in December was $599,900, which was flat with November's median price and represents a 19.34% increase from last December. The average closing price was $705,753, a 0.25 percent increase from November and a 15.61 percent increase from the previous year. The attached and detached segments both had close-price-to-list-price ratio averages of 101.24 and 101.66 percent respectively. A high list-to-sell ratio indicates a healthy real estate market in which buyers and sellers negotiate less over the sales price.

A third of the Denver metro area rents. Since housing inventory is scarce, prices are going up much faster than wages, and the younger population is more comfortable renting than owning, the Denver housing market is seeing a rapid rise in its rental market. The sheer demand for housing stock is making it profitable to break up large homes into multiple apartments.

Denver remains more expensive than other Colorado cities, including Fort Collins and Colorado Springs, and other major metro areas such as Phoenix and Charlotte, but considerably below California-based rent leaders and more. If Forbes could recommend this as a Denver real estate market investment strategy in 2016, it can be seriously considered today.

They said that any single-family home in the Denver housing market could be considered a good rental property due to the rapid rise in home prices. Denver Has A Large Student Population For Rental Homes. The college market presents a unique opportunity for landlords. There is a constant stream of people who will only rent unless they choose to stay after graduation. They may rent a while longer before feeling secure enough to buy a house.

Buying investment real estate in a college town is high risk. After all, when a college like Evergreen State scares off students or simply fails to attract them like many classics, private liberal arts schools that found themselves rendered redundant after brand name schools opened their doors, there’s less demand for the rental of the house as a permanent residence.

You don’t have that problem in Denver since there are so many colleges in the Denver area. Schools range from the massive community college network to the 400-student Bel-Rea Institute of Animal Technology. American Sentinel University in Aurora is home to 2600 students, while the Metropolitan State College of Denver has more than 20,000 students.

The Colorado School of Healing Arts has only 100 students, while Colorado Christian University has more than 7000. Yes, the Denver real estate market for those who want to cater to students is diverse. You could invest in rental real estate near any of these colleges, knowing you could rent or sell to people that simply want to live in the area if student demand slacks off.

Denver Rent Prices Are Going Up

Dense urban areas are seeing weaker rental prices and drops in average rents, while some suburban sunbelt areas project small increases in rents. The main reason is working people relocating to less expensive and less dense areas. The August 2022 Rent Report from Apartment List reveals that Denver rents increased over the past month.

Denver rents have increased 0.8% over the past month, and are up sharply by 8.8% in comparison to the same time last year. Currently, median rents in Denver stand at $1,443 for a one-bedroom apartment and $1,785 for a two-bedroom. This is the sixth straight month that the city has seen rent increases after a decline in January. Denver's year-over-year rent growth lags the state average of 10.0%, as well as the national average of 12.3%.

Throughout the past year, rent increases have been occurring not just in the city of Denver, but across the entire metro. Of the largest 10 cities that we have data for in the Denver metro, all of them have seen prices rise. Here's a look at how rents compare across some of the largest cities in the metro.

  • Englewood has seen the fastest rent growth in the metro, with a year-over-year increase of 13.8%.
  • The median two-bedroom there costs $1,827, while one-bedroom go for $1,186.
  • Parker has the most expensive rents of the largest cities in the Denver metro, with a two-bedroom median of $2,235; rents increased 1.3% over the past month and 10.6% over the past year.
  • Aurora has the least expensive rents in the Denver metro, with a two-bedroom median of $1,695; rents grew 0.8% over the past month and 11.8% over the past year.

Compared to most other large cities across the country, Denver is less affordable for renters.

  • Rents increased sharply in other cities across the state, with Colorado as a whole logging rent growth of 10.0% over the past year.
  • For example, rents have grown by 12.8% in Fort Collins and 7.0% in Colorado Springs.
  • Denver's median two-bedroom rent of $1,785 is above the national average of $1,358.
  • Nationwide, rents have grown by 12.3% over the past year compared to the 8.8% rise in Denver.
  • While Denver's rents rose sharply over the past year, many cities nationwide also saw increases, including San Diego (+17.6%), Charlotte (+17.2%), and Austin (+14.6%).
  • Renters will generally find more expensive prices in Denver than most other large cities.
  • For example, Charlotte has a median 2BR rent of $1,496.

The “Zumper Denver Metro Area Report” analyzed active listings last month across 14 metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Colorado one bedroom median rent was $1,534 last month. Boulder ranked as the most expensive cities with one bedrooms priced at $1,830 whereas Laramie was the most affordable city with one bedrooms priced at $700.

The best place to buy rental property is about finding growing markets. Cities like Longmont & Lakewood are good for investors looking to get started with rental property ownership at an affordable price. These trends provide a macro look at the growing rental demand. Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present their own opportunities for investors.

These cities look good for rental property investment this year as rents are growing over there.

The Fastest Growing Cities For Rents in the Denver Metro Area (Y/Y%)

  • Littleton had the fastest growing rent, up 28.3% since this time last year.
  • Fort Collins saw rent climb 25%, making it second.
  • Longmont ranked as third with rent increasing 24.6%.

The Fastest Growing Cities For Rents in the Denver Metro Area (M/M%)

  • Fort Collins had the largest monthly growth rate, up 6.3%.
  • Littleton rent climbed 6.2% last month, making it the second fastest growing.
  • Loveland was third with rent increasing 5.9%.
Denver rent prices 2022
Source: Zumper

Denver Is Relatively Landlord-Friendly

Colorado is relatively landlord-friendly; compare it to the West coast, and it is a landlord’s dream. You don’t have to give tenants notice that you’re entering a property. You can quickly begin evictions if they haven’t paid the rent. That protects your investment in the Denver housing market. There’s no limit on late fees.

There are no state laws that prevent you from rekeying the locks after evicting them. If they violate the lease, give them formal notice. The tenants then have 72 hours to correct the issue or move out. If they don’t comply with notices, then you can go to court. If the court agrees with you, the sheriff gives the tenants 48 hours to move out before forcing them out.

Denver's Limited Room to Grow Keeps Housing Supply Tight

Many of the fastest-growing markets in the US are along the Front Range, a part of the Southern Rocky Mountains. While there are houses in the hills, it is a lot harder to build on the mountainous landscape than on flat plains. In Denver’s case, the massive national forests and Rocky Mountain Park to the west of Denver and its suburbs prevent the expansion of the Denver housing market in that direction. This keeps home prices higher than they’d be in places like Dallas.

The residential median home price in Denver hovers around $530K. That’s a steal for the migrants from California, but the sheer numbers of them coming in is pricing locals out of the housing market. The median monthly rent here – and that includes one-bedroom apartments – is around $1100 a month. Note that you could get much more for a spacious single-family home for rent or a large condo. With a 3 bedroom detached single-family home, you could receive well over $2000 per month in rent. You’ll find strong ROI numbers for the Denver real estate market.

Denver's Quality of Life

We can joke about the people who moved to Colorado decades ago, inspired by the movie “Rocky Mountain High”. We’re not going to joke about the over-hyped medical marijuana industry there today. U.S. News & World Report published its list of the “150 Best Places to Live in the U.S.,” and four of the top five cities are right here in Colorado: Boulder (1), Denver (2), Colorado Springs (4), and Fort Collins (5). Denver was the second-best city to live on that list.

The area was a little lower on value than many like, but it ranked high on jobs, quality of life, and desirability. It is a beautiful city to live near the mountains – located on the western edge of the exquisitely beautiful High Plains. It is exactly one mile high above sea level and has the largest city park system in the nation, with 14,000 acres of mountain parks and 2,500 acres of natural areas.

That isn’t enough on its own to draw huge numbers of people to the Denver real estate market, but it is a factor. It has become the 19th-most populous city in the nation. The metro area population of Denver (as of 2020) is 2,827,000, a 1.33% increase from 2019 (Macrotrends.net).

Denver was ranked as a Beta world city by the Globalization and World Cities Research Network. It has been one of the fastest-growing major cities in the United States, and real estate investments provide a direct way to participate in the strong growth of these economies. The strength of the overall economy significantly impacts the real estate market.

Denver's Strong Economy & Jobs Boost Its Housing Market

Job growth directly affects the real estate market. Demand for all types of real estate increases with the number of local jobs, as during periods of economic development or boom. Jobs are a major reason why people move to Denver in the first place. Denver’s unemployment rate has been well below the national average for years.

In June 2022, Denver MSA had unemployment rate was 3.3%, lower than the national average of 3.7%. Over the past 25 months, Colorado has added 410,300 nonfarm payroll jobs, compared to losses totaling 374,500 in March and April 2020. That translates to a job recovery rate of 109.6 percent, which exceeds the U.S. rate of 96.3 percent.

Forbes ranked Denver as the number one Best Place for Business and Careers in 2015. Additionally, the magazine placed Denver 16th for employment growth and 20th for education. When one considers the huge oil and government sectors, as well as the rapidly expanding aerospace and technology businesses, it's no surprise that Denver is seeing such a big job boom.

The National Renewable Energy Laboratory contracts for research and development while companies such as Halliburton profit from a profitable oil play. Aerospace and technology positions are available at Ball Aerospace, Raytheon, and Lockheed-Martin, whilst software engineers are in demand at Rocket Software, StorageTek, and Sun Microsystems.

That explains why Denver is one of the top cities for in-migration, attracting people from all over the state as well as the country. Due to its proximity to the mineral-rich Rocky Mountains, Denver has long been a home for mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy. The top 25 employers in Metro Denver include government and municipal organizations, and corporations.

Denver Technological Center, better known as The Denver Tech Center or DTC, is a business and economic trading center located in Colorado in the southeastern portion of the Denver Metropolitan Area, within portions of the cities of Denver and Greenwood Village. It is home to several major businesses and corporations.

The U.S. Government is the largest employer in Metro Denver. The Department of the Interior includes such agencies as the Bureau of Land Management, Office of Surface Mining and Reclamation, and Bureau of Reclamation, and all have offices in or near the Denver Metro area. Another top employer in the Denver Metro Area is the State of Colorado.

It employs nearly 30,000 people in the Denver Metro area. As the capital and largest city in the state, Denver hosts the State of Colorado in multiple locations. Centura Health is one of the top 25 employers in the metro Denver area. Its massive health care network includes 15 hospitals, eight affiliate hospitals, health neighborhoods, health at home, urgent care centers, emergency centers, mountain clinics, 100 plus physician practices, and clinics and Flight for Life Colorado.

Denver is well known for its proximity to the Rockies. Other attractions in the area include but are not limited to the Denver Zoo and the Denver Botanic Gardens. Many of those 30 million tourists would love to have rented a house or apartment for their visit instead of a hotel. Then there’s the business traveler. Denver hosts around 80 conventions a year, too.

Whether someone is staying for a week for a convention or working a contract job in the tourism industry, this drives demand for short-term rentals that can be incredibly profitable. Renting on sites like Airbnb is legal if you have a business license, though around half of the Airbnb rentals are thought to be violating that rule. Denver is particularly progressive with allowing people to rent out their homes and apartments on Airbnb, though landlords may not agree with it.

Known Areas of Redevelopment

You don’t want to invest in the Denver housing market and end up losing money because the neighborhood is going downhill. Conversely, areas slated for redevelopment will almost certainly go up. And Denver has known and planned for areas of redevelopment. Downtown Denver saw multiple infill projects downtown ten years ago. Redevelopment is planned around Elitch Gardens today.

Key trade point for the country – Denver is home to several large corporations in the central United States. Denver South is home to 7 Fortune 500 companies. Denver was named 6th on Forbes Magazine’s “Best Places for Business and Careers.” Home for mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy.

Denver's Demographic Momentum

At first glance, the average age of 36 for residents versus 40 for the national average doesn’t sound too promising. However, this long-established city has already been noted as a great place to retire. That pulls the average age up. The coolness factor and job market attract equal numbers of young adults. That is why Millennials make up about 22% of Denver’s population. And given the job market and quality of life, they’ll probably stay here to raise families, generating more demand for the Denver housing market.

Generation X made that decision, too, which is why roughly a quarter of residents are under the age of 20. Additions to the local labor force tend to drive rents and prices up on properties in the vicinity and result in the local construction of homes and apartments. That will propel the Denver real estate market for decades to come.

Denver Colorado Real Estate Investment Markets

Investing in Denver's real estate can be a worthy investment due to a steady rate of appreciation. There are many reasons why the Denver real estate market is going strong today and is certain to remain strong for years to come. You cannot afford to miss out on this growing and appreciating real estate market. Good cash flow from Denver investment properties means the investment is, needless to say, profitable.

On the other hand, a bad cash flow means you won’t have money on hand to repay your debt. Therefore, finding a good Denver real estate investment opportunity would be key to your success. Even as Denver home prices have reached new heights, the market remains attractive to residential real estate investors in the $300,000 to $399,000 price range. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain.

The homebuyers won’t be able to outbid real estate investors and would end up renting. The high prices combined with the lack of higher gains have slowed down fixing and flipping investment properties in Denver. The best investment is now looking for a rental property that will generate good cash flow. Your best tenants would be the retirees who intend to relocate to Denver and want to purchase property to rent out. The three most important factors when buying real estate anywhere are location, location, and location.

The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Denver investment property and you should be able to flip it for a lump sum profit. The neighborhoods in Denver must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls.

Some of the popular neighborhoods for buying a house or an investment property in Denver are Jefferson Park, Berkeley, Park Hill, Cheesman Park, Congress Park, Hilltop, Sunnyside, Capitol Hill, Highland, Platte Park, Stapleton, Reunion, Cherry Creek, Aspen, and Washington Park.

Denver housing prices are not only among the most expensive in Colorado but they are also some of the most expensive in all of the United States. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods. As with any real estate purchase, act wisely. Evaluate the specifics of the Denver housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Denver.

The inventory is low, but opportunities are there. According to Realtor.com, there are 69 neighborhoods in Denver, where properties are available for sale. If you think of investing in Denver, you have decided on a long-term investment property. Here are the ten neighborhoods in Denver having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.

  1. Victory Crossing
  2. Stapleton
  3. Stapleton South
  4. Stapleton East
  5. Stapleton North
  6. Stapleton Southeast
  7. CBD
  8. Ballpark
  9. City Center
  10. W 14th Ave / Quitman St

Colorado Springs is another sizzling hot market for real estate investment in 2020. The Colorado Springs real estate market contains several large populations of renters, many practical reasons for people to move here from the surrounding area and across the country, and long-term factors that will drive growth for years to come. Forget the Mile High City and invest in the Colorado Springs real estate market.

Aurora is a fairly large city on the east side of Denver. Its proximity to Denver has long kept it in the realm of the Denver suburb. The Aurora real estate market 2020 is seeing rising prices & rents. Aurora, Colorado is more than a growing suburb. It is a large, thriving city in its own right. It has a bright future, and it is poised for rapid appreciation and increasing rental rates. This is a good time to invest in the Aurora real estate market.

Boulder real estate market is another good place to buy investment properties. Boulder is located in northern Colorado. The Boulder metro area is becoming a high-tech hub, driving up rental rates and property values. Others are lured here by the promise of high-paying jobs or attending school somewhere they can intern at Big Tech firms without paying a fortune. Boulder’s economy is stabilized by the presence of government research institutes and the proximity to Denver’s buzzing economy.

Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.

NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Denver, Colorado.

Consult with one of the investment counselors who can help build you a custom portfolio of Denver turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Denver. Not just limited to Denver or Colorado but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Denver turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.

Let us know which real estate markets in the United States you consider best for real estate investing! 

This article shouldn't be used to make real estate or financial decisions. Some of this article's information came from referenced websites. Norada Real Estate Investments provides no express or implied claims, warranties, or guarantees that the material is accurate, reliable, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market. This post educated investors on Denver real estate. Buying a rental property needs research, planning, and budgeting. Not all investments are good. Always do research and consult a real estate investment counselor.

REFERENCES

Market Data, Reports & Forecasts
https://www.recolorado.com
https://www.dmarealtors.com
https://www.zillow.com/denver-co/home-values
https://www.littlebighomes.com/real-estate-denver.html
https://www.recolorado.com/market-statistics/market-watch.aspx
https://www.realtor.com/realestateandhomes-search/Denver_CO/overview
https://www.zumper.com/blog/rental-price-data/
https://www.zumper.com/blog/denver-metro-report/

Best Neighborhoods for real estate
https://www.neighborhoodscout.com/co/denver/real-estate

Foreclosures
https://www.realtytrac.com/statsandtrends/co/denver-county/denver

Quality of life, Unemployment, Rent, Tourism
https://realestate.usnews.com/places/colorado/denver
https://denverrelocationguide.com/largest-employers-in-denver
https://www.mashvisor.com/blog/why-where-invest-denver-real-estate
https://www.denverpost.com/2014/12/16/denver-experiencing-its-best-convention-year-ever

Landlord friendly
http://www.landlordstation.com/blog/top-landlord-friendly-states
https://www.avail.co/education/laws/colorado-landlord-tenant-law

Short term rentals
https://crej.com/news/airbnb-31-billion-gorilla-room
https://businessden.com/2018/08/27/50-of-airbnb-landlords-ignore-denver-rules-taxes-in-booming-100m-industry

Growing rental market
https://www.5280.com/2017/04/everything-know-denvers-real-estate-market-wrong
https://www.forbes.com/sites/ingowinzer/2016/07/31/should-you-invest-in-denver-area-real-estate/#16f926277fc5

Redevelopment
https://denverinfill.com/home-old.htm
https://www.denverpost.com/2018/03/06/river-mile-denver-elitch-gardens-redevelopment/

Colleges
https://www.collegesimply.com/colleges-near/colorado/denver

Washington State Housing Market Forecast 2022 & 2023

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According to Redfin, Washington home prices were up 5.1% year-over-year in July. The number of homes sold fell 31.3% and the number of homes for sale rose 20.4% as compared to last year. The median price of homes in Washington was $608,700. There were 9,617 homes sold in July this year, down from 14,000 homes sold in July last year. The median days on the market was 12 days, up 3 days year over year.

The number of newly listed homes was 13,309 and down 14.3% year over year. The average month of supply is 2 months, up 1 year over year. 37.7% of homes in Washington sold below list price, down 24.8 points year over year. There were only 45.1% of homes that had price drops, up from 23.0% of homes in July last year. There was a 100.3% sale-to-list price, down 4.3 points year over year.

Washington State Housing Market Forecast

According to Zillow, the typical value of homes in Washington is $624,275. This value is seasonally adjusted and only includes the middle price tier of homes. Washington home prices have increased by 18.2% over the past year and 44.5% over the last two years. Here's Zillow's forecast for some of the metro areas in Washington.

None of these MSAs of Washington is predicted to see a home price decline in 2023. Rising home values and listing prices, combined with limited inventory, indicate that Washington's housing market is tilted toward sellers. This trend will likely continue for the foreseeable future unless inventory grows faster than demand or rising interest rates ultimately dampens the demand to that extent.

Seattle, WA home values are forecasted to rise 3.1% between July 2022 to July 2023.
Spokane, WA home values are forecasted to rise 6.2% between July 2022 to July 2023.
Kennewick, WA home values are forecasted to rise 5.2% between July 2022 to July 2023.
Olympia, WA home values are forecasted to rise 7.2% between July 2022 to July 2023.
Bremerton, WA home values are forecasted to rise 3.3% between July 2022 to July 2023.
Yakima, WA home values are forecasted to rise 4.9% between July 2022 to July 2023.
Bellingham, WA home values are forecasted to rise 6.7% between July 2022 to July 2023.
Mount Vernon, WA home values are forecasted to rise 3.1% between July 2022 to July 2023.
Wenatchee, WA home values are forecasted to rise 5.1% between July 2022 to July 2023.
Longview, WA home values are forecasted to rise 5.7% between July 2022 to July 2023.

Washington Real Estate Appreciation Rate

According to Neighborhoodscout, Washington's median home value is around $512,020. The real estate appreciation rate in Washington in the latest quarter (2021 Q4 – 2022 Q1) was 4.45%. In the last twelve months, it has been 22.81%. In the last two years, it has been around 34.77% while the cumulative appreciation rate in the last decade has been around 237.81%. Orondo, Hunters, Lummi Island, Waitsburg, and Bellingham are among the Top ten highest appreciating cities in Washington since 2000.

Washington State Housing Market Forecast
Source: Neighborhoodscout

Will the Housing Market Crash in Washington?

There is undoubtedly a slowdown in the pace of home sales in the Washington housing market, but it is more of a return to normalcy. This is neither a crash nor a bubble; housing demand is still present. The slowdown is ideal for buyers who are weary of being outbid in a hot Washington real estate market or who are experiencing buyer fatigue.

All-Transactions FHFA House Price Index for Washington (Quarterly)

  • Q2 2022: 824.10
  • Q1 2022: 778.33
  • Q4 2021: 753.47
  • Q3 2021: 733.67
  • Q2 2021: 691.43
Washington Housing Market
Source: FRED

Factors That May Influence the Washington Housing Market Outlook

A rise in job growth and a decrease in the unemployment rate are two factors that contribute to a housing market boom. Both of these factors interact to cause the boom. It is impossible to break the link that exists between the economy and the housing market. The purchasing power of those considering purchasing a home is affected by both the strength of the economy and the amount of job creation.

In 2021, the real Gross Domestic Product (GDP) of Washington increased by 6.7 percent compared to the previous year. The state's real GDP experienced the most growth in 2018 when the GDP grew by 6.8 percent when compared to the previous year. The information industry added 122.12 billion chained 2012 U.S. dollars of value to the state GDP. The leading publicly traded company with headquarters in Washington was a technology company, Amazon.com. That year, Amazon.com topped the list with a revenue of about 386.06 billion U.S. dollars.

Several notable billionaires, including Jeff Bezos, former Chairman & CEO of Amazon, and Bill Gates, technology advisor and former Chairman & CEO of Microsoft, live in the state. Significant amounts of trade with Asia pass through the ports of Puget Sound. Washington is the fourth largest exporting state in the United States, after New York, California, and Texas. The ports of Washington handle 8% of all American exports and receive 6% of the nation's imports.

The state's 39,500 farms produce, ship, and grow 300 different crops, ranking second in the country. Food and beverage production employs 164,000 people in Washington State, which is the nation's leading producer of apples, sweet cherries, pears, raspberries, and hops. Over the last 10 years, Washington’s tech sector employment has grown by nearly 34%. Tech workers make up 10.7% of the state’s total workforce. The state leads the nation in the net percentage of new tech positions, with a gain of 7.6% last year.

In Washington, housing growth has remained a strong predictor of population growth. Despite strong housing growth, most cities and towns had high occupancy rates. The state added 46,500 housing units this year, 100 more than the previous year. This year, 58% of new units built were multifamily. Over the last two years, one of the state's five largest metropolitan counties has received more than 71% of all new housing units. With 17,100 new housing units, King County leads all counties and accounts for 37% of the state's total housing growth this year.

Population growth, particularly household growth, leads to an increase in housing demand. In the long run, population decline may lead to a decrease in housing demand. Washington tops 7.8 million residents in 2022. Washington's population grew by 158,100 people since the 2020 decennial census on April 1, 2020, largely due to migration. This means Washington grew to an estimated 7,864,400 people as of April 1, according to annual estimates that the Office of Financial Management prepared.

Migration continues to be the primary driver behind Washington’s population growth. From 2021 to 2022, net migration (people moving in minus people moving out) to Washington totaled 83,300. This is up by 40,500 from last year. Net migration accounted for 86% of the state’s population growth.

Home prices are directly affected by demand, which, according to real estate experts, isn't going away anytime soon. However, they are not rising as quickly as they once did, and Washington real estate agents predict that prices will level off or rise slightly this year. Some of this is most likely due to rising interest rates.

Moderate price appreciation has historically been accompanied by a six-month supply. Construction has slowed for much of the pandemic, owing to labor shortages and supply-chain issues that have made certain materials difficult to obtain. Washington's housing supply is still well short of a balanced real estate market.

Housing Inventory: Active Listing Count in Washington

Washington State Housing Supply
Source: FRED

Sources:

  • https://fred.stlouisfed.org/series/WASTHPI#
  • https://www.zillow.com/wa/home-values/
  • https://www.neighborhoodscout.com/wa/real-estate
  • https://fred.stlouisfed.org/series/ACTLISCOUWA#
  • https://www.redfin.com/city/13296/NE/Washington/housing-market
  • https://www.statista.com/statistics/306793/washington-gdp-growth/
  • https://en.wikipedia.org/wiki/Economy_of_Washington_(state)
  • http://choosewashingtonstate.com/why-washington/our-key-sectors/ict/
  • https://ofm.wa.gov/about/news/2022/06/washington-tops-78-million-residents-2022

Colorado Housing Market Predictions 2022 & 2023

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The Colorado housing market is slowing down in 2022. Houses for sale lasted somewhat longer in June than in May. June saw fewer house sales compared to the previous month and June of last year. However, sellers continue to list additional homes for sale, as if they are worried buyers will vanish. The good thing for the Colorado housing market is that home prices are not going down in 2022 and 2023.

The average home price in Colorado is $694,989. Not only the Denver metro area but the entire Colorado housing market is a hotspot to buy and sell real estate. Due to the surge in demand for homes, home prices have increased in most regions throughout the state. It has increased the difficulty of finding a home to call your home.

There are more buyers than there are houses, resulting in a seller's market that continues to drive prices up. According to the Colorado Association of Realtors, the median Colorado single-family home price topped $500k for the first time in April of last year and has now reached $580,000.

  • In July 2022, the median price in the Colorado housing market (statewide) was $580,000, up +10.5% year-over-year.
  • The Average Sales Price in Colorado was $694,989, up 7.1% year-over-year.
  • Percent of List Price Received has dropped to 100.1%.
  • Days on Market Until Sale = 25, up +13.6%.
  • Closed sales of single-family homes were down by 29.7% from last year.
  • Months supply was up 53.8% to 2.0 months, which is still a seller's market.
  • Inventory of Active Listings increased by 42.5% year-over-year.
  • New Listings decreased by 8.1% year-over-year, which shows a slight decrease in seller optimism in July 2022.

Even Colorado Springs is in the strongest seller's market that we have ever seen. Low inventory and ever-soaring prices continue to impact affordability. In August 2022, the median list price of homes in Colorado Springs, CO was $465K, trending up 12% year-over-year, according to Realtor.com. The median sale price was $472.5K. Homes in Colorado Springs, CO sold for approximately the asking price on average. The sale-to-List Price Ratio was 99.71%. On average, homes in Colorado Springs, CO sell after 48 days on the market. The trend for median days on market in Colorado Springs, CO has gone up since last month, and slightly up since last year.

Colorado Housing Market Predictions 2022 and 2023

Colorado is still a seller's real estate market with a positive price forecast for the next twelve months. The market remains anything but average. Despite the increase in the number of properties for sale this year, there is still a lack of homes on the Colorado housing market. Thus, current conditions continue to favor sellers because there are too few homes available for the number of buyers in the market, which gives them all the leverage.

In that situation, buyers will do what they can to compete for the limited number of homes for sale, and prices will rise. The median price in the Colorado housing market (statewide) in July 2022 was $580,000, an increase of 10.5 percent year on year. At the same time, the average home price was $694,989, an increase of 7.1 percent year on year.

Colorado has a track record of being one of the best long-term real estate investments in the U.S. Let us look at the home price appreciation trends recorded by Zillow over the past few years. Colorado's strong economy gives buyers the ability to spend more on housing, consequently increasing real estate prices.

Since the last decade (Sept 2012), Colorado home values have appreciated by nearly 152.7% — Zillow Home Value Index. ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in the Colorado metro is currently $586,317. It indicates that 50 percent of all housing stock in the area is worth more than $586,317 and 50 percent is worth less (adjusting for seasonal fluctuations).

In July 2021, the typical value of homes in Colorado was around $497,000. Home values have gone up 17.8% since then. Colorado is currently the seller's real estate market which means that demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. There are fewer homes for sale than there are active buyers in the marketplace.

Colorado Housing Market Predictions
Source: Zillow

Here's Zillow's forecast for some of the metro areas in Colorado. Rising home values and listing prices, combined with limited inventory, indicate that Colorado's housing market is tilted toward sellers. This trend will likely continue for the foreseeable future unless inventory grows faster than demand or rising interest rates ultimately dampens the demand to that extent. None of these MSAs of Colorado except for Boulder are predicted to see a home price decline in 2023. In Boulder, home prices may see a slight drop of 0.3% in 2023.

Denver, CO home values are forecasted to rise 1.2% between July 2022 to July 2023.
Colorado Springs, CO home values are forecasted to rise 4.5% between July 2022 to July 2023.
Fort Collins, CO home values are forecasted to rise 1.1% between July 2022 to July 2023.
Boulder, CO home values are forecasted to decline 0.3% between July 2022 to July 2023.
Greeley, CO home values are forecasted to rise 1.9% between July 2022 to July 2023.
Pueblo, CO home values are forecasted to rise 6.3% between July 2022 to July 2023.
Grand Junction, CO home values are forecasted to rise 4.2% between July 2022 to July 2023.

What's Next for the Colorado Housing Market?

Housing market forecasters predict that home prices will keep rising in Colorado. As a buyer, the longer you wait to purchase a property, the more it will cost you due to continuing home price rise. It also provides you piece of mind that your home's worth will likely increase after you purchase it. This makes it historically a wise investment and an effective inflation hedge. As a seller, price appreciation is great news for your home's worth. Again, rely on a professional to determine the optimal circumstances for selling your home and purchasing your new home.

The number of available homes for sale is expected to increase in Colorado. As a buyer, having more housing inventory for sale on the market is excellent news. Remember that the housing supply is still limited, so be prepared to act quickly and make your best offer. If you're a home seller, you should prepare for more competition as more homeowners enter the housing market.

Inflationary pressures will likely continue to influence mortgage rates. As a buyer, you should consult real estate professionals, including your lender, to discover how rising mortgage rates affect your purchasing power. If you are prepared, it may make sense to purchase now before the price increases. As a seller, rising mortgage rates motivate some homeowners to move up as quickly as possible.

In August 2022, the median sales price in Northern Colorado was $550,000 while the weeks of inventory were 9. The median sales price in Central Colorado was $634,900 while the weeks of inventory were 16, according to the stats released by REcolorado.

Northern Colorado Housing Market Trends

  • Homes Sold = 562
  • Median Closed Price = $550,000
  • New Listings = 792
  • Pending Listings = 658
  • Weeks of Inventory = 9
  • Median Days in MLS = 10

Central Colorado Housing Market Trends

  • Homes Sold = 49
  • Median Closed Price = $634,900
  • New Listings = 57
  • Pending Listings = 50
  • Weeks of Inventory = 16
  • Median Days in MLS = 22

Home prices are directly affected by demand, which, according to real estate experts, isn't going away anytime soon. However, they are not rising as quickly as they once did, and Colorado real estate agents predict that prices will level off or rise slightly this year. Some of this is most likely due to rising interest rates.

Moderate price appreciation has historically been accompanied by a six-month supply. Construction has slowed for much of the pandemic, owing to labor shortages and supply-chain issues that have made certain materials difficult to obtain. Colorado's housing supply is still well short of a balanced real estate market.

Housing Inventory: Active Listing Count in Colorado

Colorado Housing Market Supply
Source: FRED

References:

  • https://www.zillow.com/co/home-values/
  • https://www.recolorado.com/buy-sell/market-trends/
  • https://fred.stlouisfed.org/series/ACTLISCOUCO#
  • https://coloradorealtors.com/market-trends/regional-and-statewide-statistics/

5 Worst Real Estate Markets in 2022

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Smart Asset released its list of the worst housing markets for growth and stability.  Topping the list was Flint, Michigan where the glut of inventory continues to linger leading to the chance of home price decline. Smart Asset analyzed house value data from 400 metropolitan regions across the United States. They examined data from every quarter from the first quarter of 1997 until the fourth quarter of 2021.

Of the markets analyzed, not one market showed any sign of a positive price appreciation forecast.  With slow sales and dropping prices, the aggressive investor may be able to pick off some very good deals in these markets. Research, patience, and a sharpened sense of value can land you a great real estate investment.

Click to read about -> The Hottest Real Estate Markets of 2022

Here Are the 5 Worst Housing Markets of 2022

Michigan has three of the five worst housing markets in terms of growth and stability. Flint, Monroe, and Detroit-Dearborn-Livonia are among them. Over the last 25 years, the house price index has averaged an annualized growth of 2.62 percent or less in all three locations.

1. Flint, MI

Like last year, the Flint metro area ranks as the worst housing market of 2022 for growth and stability. Using historical data, they found that the chance a home price dropped more than 5% in value within 10 years of purchase is 45% – the second-worst rate for this metric. Additionally, over the past 25 years, the average home price has increased less than 83% – the 25th-worst in their study.

2. Monroe, MI

About 40 miles south of Detroit, the Monroe metro area ranks as the second-worst housing market for growth and stability. There is a 44% chance of a significant price decline for home buyers and from 1997 through 2021, the average home price index increased by only 83.77% or an annualized rate of return of less than 3%.

3. East Stroudsburg, PA

Part of the Poconos, East Stroudsburg’s housing market ranks the worst for stability in their study and 62nd-worst for growth. The probability of an East Stroudsburg homeowner experiencing a significant price decline is 46% and the overall home price index increased by less than 103% over the past 25 years.

4. Detroit-Dearborn-Livonia, MI

Over the past 25 years, the average home price in Detroit-Dearborn-Livonia, Michigan rose by only 2.62% annually on average. This is significantly lower than the annualized increase for the top housing market in our study (Austin-Round Rock-Georgetown, Texas, at 6.37%). Additionally, Detroit-Dearborn-Livonia ties with Monroe for the third-worst housing market stability score.

5. Rockford, IL

Located in northern Illinois, Rockford ranks as the fifth-worst housing market for growth and stability across all 400 metro areas they considered. If you bought a home in the Rockford metro area between 1997 and 2021, there was a 39% chance the home would have lost at least 5% of its value within 10 years of its purchase. Home prices, meanwhile, rose just 67.25% in that timespan, 398th of the 400 metro areas studied.

The complete list of the worst housing markets in 2022 is represented in the following infographic.

worst housing markets 2022
Source: SmartAsset

Methodology For Worst Housing Markets of 2022

To determine the best and worst housing markets for growth and stability, SmartAsset examined data from 400 metro regions and compared them using the following two metrics:

Stability: This is the probability that homeowners experienced a significant price decline (5% or more) at any point in the 10 years after they purchased the home.

Overall home price growth: The total growth in home prices during tperiodiod we analyzed.

All data comes from the Federal Housing Administration (FHA) and covethe 25 yearsiod from the first quarter of 1997 through the fourth quarter of 2021. They used these two metrics to create our final rankings. Areas received a score of 100 on the stability metric if there was a 0% chance of a significant price decline. The metro area with the highest chance of a significant price decline (46%) received a score of 0. Similarly, the metro area with the highest overall home price growth received a growth index score of 100 and the metro area with the lowest growth received a 0. They then averaged each metro area’s scores over the two metrics, ranging from the highest average score to the lowest.

Top 5 Coolest Housing Markets of 2022 in the United States

In June, Bankrate also released a report on which real estate markets are doing the worst during the pandemic-led housing boom. As a nationwide housing boom rages, every state saw property values increase during the 12 months that ended in September. However, some state economies are struggling with weak job growth and other challenges.

These housing markets were in the bottom five on their index:

  • 47. Connecticut. This state posted poor showings across the board.
  • 48. Washington, D.C. The district’s score was brought down by weak appreciation, high unemployment, and a hefty tax burden.
  • 49. Alaska. Tepid job growth and high unemployment weighed down the northernmost state.
  • 50. Maryland. The state posted a comparatively weak appreciation of 11 percent, along with a high level of past-due loans and a sputtering job market.
  • 51. Louisiana. It ranks worst in past-due loans, with 6.8 percent of homeowners behind on their mortgage payments. Louisiana also fares poorly on price appreciation, job growth, and tax burden.

Housing Markets That Could See a Price Decline

According to data released by the Federal Housing Finance Agency (FHFA) on Tuesday, home prices are now 34% higher than they were two years ago, and they have continued to rise from March to April. But even though the housing market is bad for buyers all over the country, home prices have gone up more in some places than in others. This has led some people to worry about a possible crash in the housing market.

At the top 3 positions, we have Boise, Colorado Springs, & Las Vegas which are expected to see some significant price declines. Prices in these markets have increased by 30% in the last year. According to Mark Zandi, chief economist at Moody's Analytics, “the most overvalued markets are in the South and Southwest,” in those areas where home prices got “juiced up by remote work” during the COVID pandemic. “Carolinas, Atlanta, down into Florida, parts of Texas, and then the Mountain West.

You could draw a line from Boise down to Phoenix and Tucson —and all the major metropolitan areas on either side of that line are meaningfully overvalued,” Zandi tells Newsweek. According to Thomas LaSalvia, the senior economist at Moody's Analytics, things are becoming worse in many Sun Belt cities where there has been any movement in the previous few years, and especially in those where there has been steady migration in the last few decades.

Many of the out-of-state people who migrated to these cities came with “large savings accounts from selling their home in a higher-priced area or large remote work incomes” to areas where the local population had a substantially lower income. With this money, they pushed local buyers out of the market in bidding wars for purchasing homes.

These are the cities with the most overvalued homes in the nation:

  1. Boise City, ID
  2. Colorado Springs, CO
  3. Las Vegas, NV
  4. Phoenix, AZ
  5. Coeur d'Alene, ID
  6. Tampa, FL
  7. Atlanta, GA
  8. Fort Collins, CO
  9. Sherman, TX
  10. Jacksonville, FL
  11. Idaho Falls, ID
  12. Lakeland, FL
  13. Greeley, CO
  14. Longview, WA
  15. Charleston, SC
  16. Albany, OR
  17. Denver, CO
  18. Clarksville, TN
  19. Greensboro, NC
  20. Charlotte, NC

Sources

  • https://www.bankrate.com/mortgages/housing-heat-index/
  • https://smartasset.com/data-studies/best-and-worst-housing-markets-for-growth-and-stability-2022
  • https://www.newsweek.com/housing-market-crash-could-hit-these-20-cities-hardest-1720201

Manhattan Housing Market: Prices | Trends | Forecast 2022

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Manhattan and New York City are synonymous for all intents and purposes. More than 1.6 million people live in Manhattan. In this article, our focus will be on the Manhattan real estate market trends in 2022. Manhattan is the most densely populated part of New York City’s five Burroughs, and it is the heart of the city. New York City itself is home to more than eight million people. Manhattan has long been one of the hottest property markets in the world, and this is partially due to Manhattan's insane real estate prices.

Manhattan Real Estate Market 2022 Trends

Data by Redfin shows that the median sales price of homes (all types) in Manhattan was $1,200,000, flat since last year. The median sale prices of a single-family home and a condo/co-op in Manhattan are $7,500,000 and $1,186,500, respectively. Manhattan area townhouses have a median sale price of $8,500,000, making them more expensive than single-family homes.

  • On average, homes in Manhattan sell after 92 days on the market compared to 139 days last year.
  • There were 1,133 homes sold in May this year, up from 1,152 last year.
  • The median days on the market are 92, down 47% from last year.
  • The median sales price of homes in Manhattan was $1,200,000 last month, flat since last year.
  • Homes for sale in Manhattan have a median listing price of $1.5M.

Upper West Side Housing Market

In May 2022, Upper West Side home prices were up 9.9% compared to last year, selling for a median price of $1.3M. On average, homes in Upper West Side sell after 89 days on the market compared to 134 days last year. There were 556 homes sold in May this year, down from 576 last year.

Upper East Side Housing Market

In May 2022, Upper East Side home prices were up 12.7% compared to last year, selling for a median price of $1.3M. On average, homes in Upper East Side sell after 95 days on the market compared to 135 days last year. There were 654 homes sold in May this year, down from 680 last year.

Manhattan Housing Sales Q2-2022

According to Douglas Elliman, the median sales price in Manhattan hit an all-time high, while the average sales price reached its third-highest level. The amount of second-quarter sales reached its greatest level since 2007. The market share of cash buyers increased to the third-highest level seen, a return from the low recorded five quarters ago.

The median sales price of co-ops reached an all-time high, marking the sixth consecutive year-over-year increase.  The median sales price of condominiums also reached an all-time high, marking the third consecutive year-over-year increase. Condominium listing inventory saw its greatest first-to-second-quarter increase in at least eight years.

Indicators of the overall price trend for luxury goods continued to grow annually. The number of new development sales has more than doubled compared to the same period last year, while the number of new development listings has risen rapidly for the third consecutive quarter. The pricing trends in Manhattan continued to increase from the preceding year and pre-pandemic levels. The median sales price increased by 10.6 percent yearly to a record $1,250,000, surpassing the previous record established during the same time frame three years prior.

Although the current “Elliman Report: June 2022 New Signed Contracts” indicates a decline in newly signed contracts over the preceding several months due to rising mortgage rates, concluded sales increased by 12.2 percent to 3,834. This indicates that the current quarter is the peak season for closed sales. Nonetheless, the second quarter was the highest in fifteen years and the fourth-highest in history.

Listing inventory increased by 1.1 percent year-over-year to 7,968 but increased by 15.4 percent from the previous quarter, the largest Condo significant growth from the first to the second quarter in eighteen years. Listing inventory was 21.7% higher than the 6,546 second-quarter average of the past decade, consistent with the slowing pace of the past several quarters.

The months of supply, the number of months to sell all listing inventory at the current sales rate, was 6.2 months, 10.1% faster than the prior-year quarter but was the third straight quarter- over-quarter easing of the market pace. The market share of bidding wars fell from the prior quarter’s four-year high of 9.3% to 8.5%, with the average amount of premium paid falling to 4% from 5.3% over the same period.

After plunging to a record low of 39.3 percent in the first quarter of 2021, the market share of cash purchases increased to 52.6%, the third-highest on record and significantly above the average market share of 48.4% over the previous eight years. The increase was driven by higher-priced product sales. Ninety-nine point six percent of sales in excess of $5,000,000 were conducted using cash.

Manhattan Rental Market Trends

In the latest Douglas Elliman report, the price trend indicators in Manhattan rose to record levels. The median rent in Manhattan reached the $4,000 threshold for the first time as lease signings continue to rise. New leases expanded year over year for the third straight month while the vacancy rate remained under two percent for the sixth consecutive month. Doorman's net effective median rent reached a new high for the fifth consecutive month. Luxury price trend indicators all rose to the second-highest on record while their share of one-year leases rose to a new high, exceeding half of all new leases.

  • There were 4,934 new leases signed, compared to 9,491 a year prior — close to a 48% decrease.
  • The average rental price in Manhattan in May 2022 was $4,975, an increase of 22% from May 2021 ($4,078).
  • The average rental price increased by 3.2% from April 2022 ($4,822).
  • The median rental price in Manhattan in May 2022 was $4000, an increase of 25.2% from May 2021 ($3195).
  • The median rental price increased by 1.9% from April 2022 ($3925).
  • The current vacancy rate is 1.77%. A year ago it was 7.59%.
  • Listing inventory (5776) is down by 69.6% from year-ago levels (19,025).
  • The median rental price increased in Downtown (+28.6%), Northern Manhattan (+11.1%), and Westside (+31.3%).
  • The median rental price decreased in Eastside (+27.1%).

Manhattan Real Estate Investment Overview

We have already discussed the Manhattan housing market trends. Purchasing an investment property in Manhattan real estate is a little different from shopping for your car or primary residence. Manhattan has been included among the cities for real estate investment over the past few years. While you still want to get the most for your money, if you are looking to make a profit, you don’t want to buy the most expensive property on the Manhattan real estate market and expect to make a good profit on rents.

Perhaps you are looking for a slightly different hold-over, an investment property in Manhattan that you might move into or sell at retirement in the future! Either way, knowing your profit potential and purpose is the first thing to consider. Some of the best neighborhoods in Manhattan are Upper East Side, Upper West Side, Midtown East, Woodside, Brooklyn, Astoria, SoHo, Harlem, Elmhurst, Tribeca, Williamsburg, Maspeth, The Heights, Queens, Long Island City, Greenpoint, and Sunnyside.

Upper West Side offers an abundance of public green space. It is home to Lincoln Center, which hosts performing-arts institutions like the Metropolitan Opera and New York City Ballet. Further away from the city center you'll find charming Manhattan neighborhoods like Hamilton Heights and Washington Heights. Gramercy Park is one of the most beautiful areas of Manhattan.

It is located in a quiet corner and attracts fewer tourists than the nearby East Village and Soho. Battery Park is a favorite choice among families and it always ranks among the safest neighborhoods in New York City. With the newly designed Hub with 11 subway lines, transportation is very convenient from here.

Lenox Hill is a posh neighborhood on the Upper East Side. It runs from about 60th Street up to 77th Street and Fifth Avenue to Lexington Avenue. It forms the lower section of the Upper East Side, closest to Midtown. Some of the most expensive real estate in Manhattan is located in this neighborhood. The one thing about Lenox Hill that it is famous for is the hospital. Lenox Hospital is one of the best in NYC. Lenox Hill Hospital just joined forces with North Shore-LIJ Health System, which now provides a much larger hospital in NYC.

Let’s take a look at the number of positive things going on in the Manhattan real estate market which can help investors who are keen to buy an investment property in this city.

The Diverse Manhattan Housing Market

The Manhattan real estate market shouldn’t be a top spot for investment because it is so expensive or famous. Its biggest draw is the sheer size of the Manhattan housing market. You can own a variety of condos, apartment buildings, and single-family homes in your Manhattan real estate investment portfolio scattered across a wide area and still be part of the same housing market. You only have to know one set of housing regulations affecting tenant screenings and evictions.

Demographic diversity is not relevant to this discussion. The sheer variety of Manhattan real estate investment properties is. The incredibly expensive Manhattan real estate market has resulted in novel, high-density projects that offer very high rates of return. For example, the rent-a-desk concept behind WeWork has led to a rent bunk of residential communities popping up, often just down the street from the rent desk places.

You could invest in these startups or renovate commercial space to create these high-density living arrangements. New York City has also revised its rules to allow for much smaller single-resident occupancy apartments. Just make sure you get the necessary permits before subdividing an existing unit because fines can be steep.

There are a variety of rules that lead to tenants staying once they find a decent place in the Manhattan housing market. We periodically hear the stories of someone who moved into an apartment, got rent control, and stayed for sixty years. In the right circumstances, this is a boon for a Manhattan real estate investment property owner.

You don’t have to worry about vacancies. Then there’s no need to advertise the property or worry about the rules regarding such advertisements. A good tenant will pay the rent month after month. It is guaranteed cash flow, and it is profitable as long as you can keep property maintenance costs and taxes below that level.

The Long Term Real Estate Forecast

New York City has long been the biggest city in the United States in almost every way. It has the largest school district in the country. It has also garnered attention for having the most people moving out in record numbers. We have to keep this in perspective since thousands moving out every week from NYC have far less of an impact than if it were a small metro area like San Antonio.

In the short term, this creates a buying opportunity in the Manhattan real estate market. After all, prices are down.  The Manhattan housing market, though, remains one of the most expensive in the world. The local leadership driving away jobs and attacking schools is contributing to this. Fortunately, it means Manhattan real estate investment properties will rebound as soon as there is a change in leadership.

The Manhattan real estate market is famous for an average one-bedroom apartment surpassing 3000 dollars a month in rent. However, you don’t have to have millions of dollars of cash on hand to consider Manhattan real estate investment. There are cheaper properties in the boroughs, and they’ll command 1500 dollars a month in rent for a one-bedroom and much more for a two-bedroom or three-bedroom apartment. And rents in the Manhattan housing market are going up faster than the rate of inflation.

The Higher Quality of Life in New York City

People may come to New York City to try to make it big on Broadway, broadcasting, or publishing. However, they only stay if it is worth their while, whether they work on Wall Street or earn a living some other way. Poor quality of life will drive people away, whether or not they have children but especially after they have children. And it is quality of life that makes the Manhattan real estate market a better play than San Francisco.

New York City has a homeless problem, but it doesn’t have poop so bad they have an app for that or needles littering the place. That will keep New York City's housing market demand strong for the long term. Stronger public transit and the number of activities available at any given time make the city more attractive to Millennials, too.

The demographic churn you see in the NYC area is young adults moving to Manhattan for work, moving to the boroughs to afford a house or larger apartment when they have children, then moving again when they are childless middle-aged adults. However, most are not fleeing the metro area after leaving the tech sector as is being seen in San Francisco.

The Relative Deal on Property Taxes

New York has one of the heaviest overall tax burdens in the United States. However, that burden varies based on the type of income you receive and the property you own. For example, co-ops are not faced with comparable property tax bills to apartment buildings. Buy a building and renovate it to create affordable, high-density housing, and you’ll be eligible for significant property tax breaks.

At the other end of the market, the luxury condo buildings going in result in relatively low tax bills for the owners on the basis of the property’s selling price, though this could still yield a tax bill far higher than what the average person could pay. Recent changes to the property tax laws that are increasing the property tax bill most will face are contributing to the flood of multi-million dollar mansions and apartment buildings by those who don’t want to pay the bill.

Conclusion

Manhattan offers incredibly dense housing, incentives for more of the same, and a large, loyal renting population. If you can afford to invest here, it can be worth the effort. Therefore, finding a good Manhattan real estate investment opportunity would be a key to your success. Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process.

They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates. NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.

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Let us know which real estate markets you consider best for real estate investing! If you need expert investment advice, you may fill up the form given here. One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.

The information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References

  • https://www.zillow.com/Manhattan-ny/home-values
  • https://www.elliman.com/corporate-resources/market-reports
  • https://www.elliman.com/corporate-resources/research-reports
  • https://www.redfin.com/city/35948/NY/Manhattan/housing-market
  • https://www.realtor.com/realestateandhomes-search/Manhattan_NY/overview
  • https://www.streetadvisor.com/search/neighborhoods-in-manhattan-new-york-city-new-york
  • https://www.cubesmart.com/blog/city-guides/nyc/5-of-the-best-neighborhoods-to-live-in-manhattan 
  • https://www.gothamgazette.com/state/8712-an-old-unfair-system-new-york-city-s-property-tax-conundrum-part-i
  • https://www.citylab.com/equity/2015/05/why-billionaires-dont-pay-property-taxes-in-new-york/389886
  • https://www.wsj.com/articles/new-more-broad-based-real-estate-tax-hits-developers-11554303511

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