The real estate market in Denver has seen healthy gains in recent years, and the year 2020 was no exception. This article will go over the housing market in Denver and where it’s expected to go in 2021.
Over the last few years, home prices in Denver rose steadily and significantly, outpacing the national average. The median home value has increased by double digits in 2016 alone.
But between mid-2018 to mid-2019, the rate of growth slowed down significantly. That was certainly a positive thing for buyers.
That said, the housing market in Denver bounced back, and home prices have increased over the past year.
A new forecast for the Denver real estate market through 2021 suggests that median home value growth will pick up slightly over the coming months.
According to the real estate data company Zillow, the median home value in Denver rose by 4.8% over the last 12 months, as already stated above (as reported in December 2020). That’s a pretty healthy rate of growth.
Zillow also predicts that the pace of growth will increase over the course of the next 12 month period. Between now and December 2021, Zillow’s economists expect that house prices in the city will rise by a rate of 7.2%, which is roughly the same rate of growth state-wide.
As of December 2020, the median home value in Denver is $474,501.
Related: Renting versus buying in Denver
With housing bubbles aside, home prices in the U.S. tend to rise by around 3% to 4% annually. Double-digit annual increases, like those seen in the Denver real estate market in recent prior years, are unusual. They’re also unsustainable over the long term, as they begin to cause affordability issues.
Rapid price growth like that simply cannot be sustained. At some point, prices will have to slow down and even plateau in some cases, which is what we’ve likely seen in Denver over the past year.
Zillow’s forecast for ~7.2% price growth over the next year suggests that the formerly red-hot Denver real estate market could be continuing its current rate of growth.
The population of Denver has grown steadily since the 1990s, and this increases demand for housing. The city is particularly attractive to millennials (ages 18 – 34) who are relocating from elsewhere in the country.
According to a LendingTree report, millennials account for 45% of all mortgage requests in Denver. Another survey, this one conducted by the Mayflower moving company, revealed that Denver was one of the top ten destinations for millennials who are planning a move.
These migration and home buying patterns are partly why the Denver real estate market has shown healthy gains in recent years. But, as we’ve said, high growth is hard to sustain over the long run, and so now we’re starting to see a slower rate of growth.
Even though home prices are expected to rise moderately in 2021 (compared to previous years), buyer demand will likely remain high for the foreseeable future. Buyers entering the market in 2021 should be prepared for a fair level of competition.
Limited housing inventory is a factor in this market. The supply of homes in Denver has increased, but the market is still quite competitive. In December 2020, buyers are competing for a less than 1-month supply in Denver. That’s down quite a bit from the same time a year earlier. Demand in Denver continues to be relatively high, and so this has balanced out the increases in supply which we’ve recently seen.
Bottom line: Home prices in Denver will probably rise steadily over the next couple of years. The local real estate market will remain very active due to high employment and housing demand. Limited inventory will have buyers competing for desirable homes. Buyers have more choices, but the demand is still high and so competition will still be fairly strong. This is the overall forecast for the Denver real estate market in 2021.
Disclaimer: This article contains predictions and projections from third parties not associated with our company. We have compiled them here as an educational service to our readers.
If you’re on the prowl for a mortgage in Denver, Colorado, Sammamish Mortgage can help you. Sammamish Mortgage has been assisting home buyers since 1992 all throughout the Pacific Northwest region. We proudly serve WA, ID, OR and CO. We have many mortgage programs to offer you. Get in touch with us today!
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