Summary: The real estate market in Denver has seen healthy gains in recent years. However, the market has cooled down over the past few months, with home prices barely having increased at all over the past year. This article will go over the housing market in Denver and where it’s expected to go in 2020.
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 over the past 12 months, the rate of growth slowed down significantly. According to real estate research firm Zillow, home prices in Denver, CO inched a meager 0.2% over the past 12 months. That hardly made a dent in housing prices in the city. That was certainly a positive thing for buyers.
Nevertheless, the level of competition in Denver is still expected to be reasonably high given current demand and inventory.
But a new forecast for the Denver real estate market through 2020 suggests that median home value growth will pick up slightly over the coming months, though nothing too outrageous.
Denver Real Estate Forecast, 2020
According to the real estate data company Zillow, the median home value in Denver rose by 0.2% over the last 12 months, as already stated above (as reported in February 2020). That’s much slower than the state-wide rate of price growth.
But Zillow also predicts that the pace of growth will pick up a bit over the course of the next 12 month period. Between now and February 2021, Zillow’s economists expect that house prices in the city will rise by a rate of 2.2%, which is a just a bot lower than the state-wide and national averages.
As of February 2020, the median home value in Denver is $451,500.
Related: Renting versus buying in Denver
Slow Price Growth Ahead?
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 ~2.2% price growth over the next year suggests that the formerly red-hot Denver real estate market could be continuing its relatively phase of much slower growth, following the double-digit gains seen in prior years. Some analysts have referred to this as a “high plateau.”
Millennial Home Buyers Boost Demand Amid Inventory Crunch
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.
Housing Market Inventory Remains Tight in Denver
Even though home prices are expected to rise moderately in 2020 (compared to previous years), buyer demand will likely remain high for the foreseeable future. Buyers entering the market in 2020 should be prepared for a fair level of competition.
Limited housing inventory is a factor in this market. According to a recent local news source in Denver, the supply of homes in Denver has increased, but the market is still quite competitive. In February 2020, buyers are competing for a mere 1.8-month supply in Denver. That’s down a whopping 33% 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 2020.
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.
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