Denver Housing Market: Prices, Trends, Forecast 2024-2025

Nicknamed the “Mile High City” for its elevation, Denver's housing market has reached new heights as well. Once known for affordability, Denver now boasts a competitive market with rising prices. This surge is fueled by a booming job market and a limited housing inventory.

However, the Denver housing market is navigating a period of adjustment. While July data exhibits a cooling trend in home sales, there's an optimistic outlook stemming from the influx of new inventory and the recent drop in mortgage rates. Buyers are now better positioned with more options and slightly less urgency, while sellers may need to adjust expectations in light of a more balanced market.

It's interesting to observe how external economic factors resonate within local markets. Each August signals the end of summer, but this year it also suggests a critical juncture for the real estate sector.

How the rest of 2024 unfolds will depend heavily on the interplay between interest rates, economic indicators, and consumer confidence. Let's discuss the key elements defining the state of the Denver housing market as of August 2024, supported by the latest data and trends.

Denver Housing Market Trends for 2024

 

Current Market Overview

As we embark on the last stretch of summer, the Denver housing market has begun to cool, mirroring seasonal trends observed in past years. According to the latest REcolorado MLS data, July 2024 brought in a slight reduction in home closings compared to June and the previous year. This decline reflects a more balanced market, marking a significant change from the frenzied pace of prior seasons.

Median Home Prices have stabilized at $600,000. While this price points to a positive growth trajectory with a 2% year-over-year increase, it suggests a possible plateau in the rapid increases experienced in previous years. This stabilization may influence buyer behaviors as affordability becomes an increasingly pressing concern amid fluctuating mortgage rates.

Inventory Levels and Buyer Leverage

One notable development in July was the rise in inventory levels across the Denver Metro area. With new listings up 11%, the market has seen its highest inventory in a decade, providing buyers with more options. This uptick in availability has created a scenario where homes are spending longer on the market, with the median time to pending status now at 16 days, which is a week longer than the previous year.

This shift towards increased inventory has given buyers a degree of leverage previously unheard of in the rapidly competitive Denver landscape. I remember when the market moved at lightning speed, with homes frequently selling within days—sometimes even hours—after listing. This latest trend gives a glimmer of hope for prospective buyers who may have felt sidelined in recent years due to overwhelming competition.

The Influence of Interest Rates

In July, the Denver market also experienced a significant development regarding mortgage interest rates. As of late July 2024, the 30-year fixed mortgage rate dropped to 6.8%, the lowest point for the year, as expectations grew for potential Federal Reserve rate cuts following a cooler-than-expected jobs report. This decline could reignite interest for buyers who had previously stalled their search due to rising interest costs.

Personal experience tells me that even a slight shift in interest rates can dramatically influence buyer psychology. The prospect of lower monthly mortgage payments can transform a hesitant buyer into an eager participant, breathing new life into market activity. The interplay between interest rates and market dynamics is not to be underestimated, particularly as the autumn months approach and families often seek to settle before the year ends.

Rental Market Insights

While purchasing a home remains a goal for many, the rental market in Denver is also experiencing noteworthy changes. July saw a 6% increase in leased properties compared to last year, with median lease prices hovering around $2,995. Furthermore, new rental listings surged by 15% year-over-year.

This data suggests that many individuals, particularly younger people or those who may be relocating for job opportunities, are increasingly opting for rental properties rather than immediate purchases. From my perspective, this increase reflects broader economic trends influencing decisions—whether it's the flexibility offered by rentals or simply the current financial climate.

Final Thoughts: A Shifting Real Estate Market

The Denver housing market is clearly navigating a period of adjustment. While July data exhibits a cooling trend in home sales, there's an optimistic outlook stemming from the influx of new inventory and the recent drop in mortgage rates. Buyers are now better positioned with more options and slightly less urgency, while sellers may need to adjust expectations in light of a more balanced market.

It's interesting to observe how external economic factors resonate within local markets. Each August signals the end of summer, but this year it also suggests a critical juncture for the real estate sector. How the rest of 2024 unfolds will depend heavily on the interplay between interest rates, economic indicators, and consumer confidence.

Factors Impacting the Denver Housing Market in 2024?

Lingering Obstacles

When I think about the current Denver housing market, it's hard to ignore the challenges we face.

1. Mortgage Rates: First off, mortgage rates are still sitting at levels much higher than what we've seen in the past few years. This bumps up the cost of buying a home, and I can understand why many potential buyers might feel discouraged. It’s like being excited about a new gadget, only to find out that it’s significantly out of your budget.
2. Inventory Shortage: Then there’s the inventory shortage. Here in Denver, the number of available homes feels painfully low. It’s frustrating to witness how this scarcity drives prices up, creating a bidding war where buyers feel pressured and often get outbid. I can only imagine how stressful it must be for someone trying to find a home.
3. Affordability Concerns: Lastly, there’s the affordability issue. With home prices and interest rates still elevated, the dream of homeownership seems increasingly remote for many, especially first-time buyers. I remember how challenging it was for me when I was looking, and I empathize with those taking their first steps into this market.

Reasons for Potential Hope

Despite these obstacles, I believe there are flickers of hope on the horizon.

1. Inventory on the Rise: For starters, it’s encouraging to hear that the inventory of homes might be on the rise. If this trend continues, we could see a more balanced market, where buyers have a better chance of finding something suitable without feeling rushed into decisions. It would be refreshing to have more options and a little breathing room during negotiations.
2. Interest Rate Dip: On top of that, experts are suggesting that mortgage rates could start to dip. This possibility is exciting because lower rates would make buying a home in Denver more attainable for many people, potentially reigniting interest in the market. I know how much a slight change in rates can shift people's perspectives and encourage action.
3. Seller Adjustments: Finally, it seems like sellers might need to rethink their strategies as the market evolves. Adjusting their pricing expectations could lead to a more realistic approach that attracts buyers, fostering a healthier negotiation process. This adaptability is something I believe could benefit everyone involved, making for a more favorable environment in the long run.

Denver Real Estate Market Predictions 2024-2025

The Denver real estate market has been on a tear in recent years, attracting young professionals and boasting a thriving economy. But what's in store for the future? Let's delve into the data and predictions to see where the market might be headed.

According to Zillow's data, the average home value across the Denver-Aurora-Lakewood metropolitan area is $589,914, reflecting a modest increase of 1.5% over the past year. Homes in this region tend to go pending in about 14 days, indicating a robust demand despite changes in economic conditions.

However, the market also reveals a few critical statistics:

• Median Sale Price (June 30, 2024): $593,333
• Median List Price (July 31, 2024): $616,666
• Sale-to-List Price Ratio (June 30, 2024): 1.000
• Percentage of Sales Over List Price: 37.5%
• Percentage of Sales Under List Price: 37.9%

This data suggests that while many homes are selling quickly and above their listed prices, a significant number are also reducing prices or selling below the list price, indicative of a balancing market.

Are House Prices Dropping in Denver?

Market analyses for the Denver area indicate potential declines in home prices in 2024. Experts predict a 5% to 5.1% decrease in home values by the end of the year. This prediction arises from observed increases in housing inventory and affordability challenges caused by rising mortgage rates, which curtail buyer enthusiasm.

This positioning echoes sentiments from various real estate commentators who suggest that Denver is experiencing a cooling phase after years of rapid appreciation. As homes linger on the market and buyers grow anxious about the potential for a national downturn, sellers may need to adjust their expectations accordingly.

MSA Forecast: What to Expect in Coming Quarters & 2025

A glance at the Market Statistical Area (MSA) forecast illustrates a continued downward trend in home values over the short term:

• Forecast for August 31, 2024: -0.1%
• Forecast for October 31, 2024: -0.7%
• Forecast for July 31, 2025: -1.1%

These projections signal a gradual softening of the market, suggesting that while we may not witness a crash akin to the 2008 housing crisis, a measured decline in values is anticipated. As inventory levels normalize from the historically low figures seen in 2021, prospective buyers may find better opportunities.

Will It Crash or Boom in 2025?

The dichotomy of opinions in real estate circles fuels speculation about whether the Denver market will crash or boom. On one hand, the economic forecasts and increasing supply might lead to a more balanced market that benefits buyers. On the other hand, Denver's historic desirability and demographic growth may prevent a full-blown crash, ensuring that any downturn is superficial.

Although the current indicators lean towards a stabilization rather than a flourishing market, demographic shifts, job growth, and lifestyle preferences will play crucial roles in shaping the market's trajectory.

As a long-term observer of the Denver real estate scene, I believe the current dynamics offer a unique moment for both buyers and sellers. Buyers might find this as an opportune time to negotiate better deals, especially with sellers willing to adjust prices. On the flip side, sellers should prepare for potentially extended time on the market and be open to negotiations.

The real estate sector is always evolving. Each economic shift, whether due to interest rates, inventory changes, or broader economic trends, creates new opportunities and challenges. Having clear expectations and monitoring market trends is vital for anyone involved in Denver's vibrant real estate market.

This graph by Zillow illustrates the growth of home values in the region over the past year, along with a forecast suggesting this trend will likely continue for the next year.

How is the Denver Area for Real Estate Investors?

The Denver Metro Area has been a hotbed for real estate investment, and for good reason. Denver's real estate market offers a compelling combination of economic strength, limited land, and a growing population – factors likely to persist for years to come. This can be particularly enticing for long-term investors seeking stable rental income and the potential for capital appreciation.

Here's a breakdown of the market from an investor's perspective:

Pros for Investors:

• Thriving Economy: Denver boasts a strong job market, particularly in tech and aerospace, attracting a wave of young professionals who fuel rental demand. According to MMG Real Estate Advisors, Denver's economic outlook for 2024 is tempered growth with a 0.4% job growth rate. The Colorado General Assembly also predicts that 2024 will have an annual growth of 2.4%. This translates to a consistent stream of tenants, crucial for generating positive cash flow and ensuring property occupancy.
• Highly Desirable Quality of Life: Beyond economics, Denver offers a highly desirable lifestyle. With 300 days of sunshine, a thriving cultural scene, craft breweries, and stunning natural beauty with the Rocky Mountains at its doorstep, Denver attracts residents from all walks of life. This creates a diverse tenant pool and a vibrant city, further fueling demand for housing.
• Diverse Tenant Pool: Beyond young professionals, Denver's cultural scene, craft breweries, and stunning natural beauty attract a wide range of residents, from artists and retirees to students and entrepreneurs. This diversification mitigates risk for investors compared to a market overly reliant on a single industry. If a particular industry faces a downturn, it's less likely to cause a ripple effect throughout the entire rental market.
• Limited Land Availability: Nestled by the majestic Rocky Mountains, Denver has limited space for sprawl. This scarcity of developable land keeps housing inventory tight, pushing rents and property values upwards. This dynamic benefits investors seeking properties with the potential for steady rental income appreciation and long-term capital gains.
• Population Growth: Denver's population has been on a steady upward climb for years, fueled by its economic opportunities and attractive lifestyle. It has experienced population growth, with the Denver-Aurora-Centennial metro area growing 1.2% between July 2020 and July 2023, adding more than 35,000 people to the region. This is compared to a 1% population increase nationwide. In 2024, the metro area's population is 2,963,000, which is a 1.09% increase from 2023. This consistent population growth translates to a sustained demand for housing, which can benefit real estate investors in a few ways. First, it helps ensure a steady pool of renters. Second, it contributes to an overall rise in property values, allowing investors to potentially build wealth through appreciation over time.

Cons for Investors:

• Competitive Market: Denver's allure isn't a secret, leading to fierce competition among investors. Be prepared to move fast and potentially offer above asking price to secure a deal. The competition can be particularly intense for single-family homes and desirable neighborhoods, so investors need to have their financing pre-approved and be ready to act decisively.
• High Entry Point: Denver's median home price sits above the national average. The median listing home price in Denver, CO was $614.9K in April 2024 while the price per square foot was $399. You'll need a solid financial foundation to enter this market. A larger down payment will not only strengthen your offer but also reduce your monthly mortgage payment, allowing for better cash flow management.

The Verdict: Denver's real estate market presents a promising landscape for investment, but it's not a walk in the park. Before diving in, delve into market research. Identify your investment goals, whether it's building long-term wealth through appreciation or generating steady rental income. Connect with a local real estate agent who can give you a current pulse of the market and navigate you towards the right property based on your criteria.

FAQs

Is Denver a Buyer's Market or a Seller's Market?

Denver currently leans towards a seller's market. This means there's generally more demand for houses than there are available properties. This can lead to competition among buyers, with homes potentially selling above asking price and inventory moving quickly.

Are Home Prices Dropping in Denver, CO?

No. While the Denver market has seen some moderation in price growth compared to the peak frenzy of 2021, home prices haven't dropped significantly. They've continued to show a modest year-over-year increase.

Is This a Good Time to Buy a House in Denver?

Whether it's a good time to buy depends on your individual circumstances and goals. Denver offers a strong rental market and potential for appreciation, but there's also competition and a higher entry point compared to the national average.

What is the Future of the Housing Market in Denver?

The long-term outlook for Denver's real estate market appears positive. Economic strength, limited land, and a growing population suggest continued demand for housing. However, short-term fluctuations can always occur.

Is This a Good Time to Sell a House in Denver?

With a seller's market, Denver could be a good time to sell if you're looking to capitalize on current market conditions. However, factors like your specific property and long-term plans should also be considered.

---

ALSO READ:

• Colorado housing market forecast & trends
• Is Buying a House in Denver a Wise Investment (2024)