The Denver, Colorado housing market has generated many headlines over the last couple of years, mainly due to the fast-rising home prices in the area. Recent forecasts for the Denver housing market suggest that prices could rise more slowly in 2017.
2017 Housing Market Forecasts for Denver, Colorado
Lately, housing analysts and economists have been suggesting that the Denver real estate market is starting to level off. A July 2016 article in the Denver Post, for example, mentioned that a “high plateau” of home prices was coming. Following the double-digit price gains of the last two years, many are predicting that Denver home values will rise more slowly going forward.
Regarding a slowdown in the Denver real estate market, the Post wrote:
“…that is exactly what’s predicted by Real Estate Economics, based in Orange County, Calif. Its forecast calls for a 5.4 percent gain in median home prices in metro Denver this year  followed by a 2.8 percent increase in 2017 and a 1.8 percent increase in 2018.”
Other economists are predicting smaller gains in this market as well. According to the economic research team at Zillow, home prices in Denver rose by 10% over the last year or so (from Nov. ’15 – Nov. ’16). By contrast, their 2017 forecast for the Denver housing market is much more conservative. The group expects area house values to rise by only 3.8% over the next 12 months, through November 2017.
The S&P Case-Shiller Home Price Index is already showing smaller price gains in Denver. Their latest report, published at the end of October, showed a year-over-year price increase of 8.8% in the metro area. That was a slower pace compared to the 9.4% and 9.3% gains of the two previous months.
The bottom line is that while Denver home prices are currently rising faster than the national average, they do appear to be slowing. And most 2017 housing market forecasts suggest they could continue to slow in the months ahead.
Realtor Group: Home Buyers Are ‘Pushing Back’
In its latest Real Estate Market Trends Report, published in August, the Denver Metro Association of Realtors (DMAR) pointed to additional signs that the local housing market is cooling down. According to DMAR, multiple-offer scenarios are less common today than in the past.
Additionally, the Realtor group says sellers are becoming more flexible on inspection-related issues because “buyers are pushing back and proving their willingness to walk away.” So perhaps the market is starting to shift toward buyers.
A Return to Sustainable Growth?
From an economic perspective, this can be viewed as good news. Double-digit home price gains are not sustainable over the long term, because they outpace wage growth and other economic metrics by a large degree. This is what leads to housing bubbles. History has shown that bubbles are generally bad for the housing market, and for the economy as a whole.
A cooling trend in the Denver housing market would give wages a chance to catch up, and could help normalize a market that has been overheated in the past. In the long term, steady and sustainable growth is far better than booms and busts.
Disclaimer: This article contains predictions and forecasts for the Denver real estate market in 2017. Forward-looking statements and data were provided by third parties not associated with our company. We have presented them here as an educational service for our readers. Housing and economic forecasts should be viewed as an educated guess, not as facts.