Will the Mile High City hit a plateau next year regarding home-price growth? Or will house prices climb again now that they’re past the post-pandemic doldrums?
While it’s difficult to offer real estate market predictions with complete accuracy, the Denver-area housing market seems likely to experience steady price gains in 2024.
Despite higher home prices and mortgage rates, there’s still plenty of demand from buyers within the Denver real estate market. This factor and an ongoing supply shortage could keep the housing market competitive through the rest of this year and into 2024.
Here are the latest Denver housing market predictions for the upcoming year.
Fewer homes on the market compared to a year ago.
When measured by the total number of real estate listings, the Denver-Aurora-Lakewood metropolitan area currently has fewer homes for sale than a year ago. And that’s a challenging development for home buyers.
According to the Denver Metro Association of Realtors (DMAR), active property listings within Denver County declined by more than 17% over the past year.
Like most parts of the country, this housing market continues to experience a supply shortage. As of September 2023, the Denver area had less than a two-month supply of homes for sale. That’s well below a balanced or buyer-friendly real estate market.
In the spring of this year, new home construction increased significantly nationwide. The Denver area also experienced an uptick in construction activity. But it remains to be seen whether or not the 2024 Denver real estate forecast will include a shift in favor of buyers.
At this point, the “safest” prediction is that the Denver real estate market in 2024 will continue to experience a relative shortage of homes for sale. Because of this, buyers will experience a high level of competition, especially in the most sought-after neighborhoods and communities.
A faster-than-average pace of home sales.
Like much of the country, the Denver real estate market cooled down toward the end of last year. Mortgage rates more than doubled at a time when prices for just about everything else were also on the rise. This, in turn, led to a slower pace of home sales.
But since the start of 2023, the Denver-area real estate market has accelerated quite a bit. The median number of “days on the market” has declined, meaning homes sell faster.
Home buyers have adjusted to the higher mortgage rate environment and are gradually reentering the market, leading to faster sales.
We will probably see a seasonal slowdown from late November through early January, the usual real estate market activity pattern. But beyond that, the Denver real estate market forecast for 2024 could move relatively quickly.
Home buyers should be prepared to move quickly when the right property arises.
Slow but steady price growth seems likely.
The median home price for the Denver-Aurora metro area peaked at around $609,000 in the summer of last year. After reaching that all-time high, home prices across the Denver area declined for several months. The same trend occurred in most cities and metro areas across the United States.
However, all indicators show that local home values have begun to rise again. And at least one suggests that this trend could continue for the foreseeable future.
According to the September 2023 DMAR report mentioned above:
“Falling home sales have done little to cool home prices, however, which have continued to sit at record high levels nationally thanks to a limited supply of homes for sale.”
According to Zillow, the median home value for the Denver metro area bottomed out at around $569,000 in April 2023. Since then, home values have been tracking upward again. Zillow recently predicted that house values in the Denver area would rise by around 3.6% from August 2023 to August 2024.
This would mark a return to normalcy where home prices are concerned. Fast-rising prices have created affordability issues for many would-be buyers in Denver and elsewhere across the country. A slower rate of appreciation would allow wages to keep pace and make the Denver real estate market more affordable.
Lower mortgage interest rates expected.
As mentioned, mortgage interest rates have been very high over recent months. According to the most recent data from the Mortgage Bankers Association (MBA), mortgage interest rates increased to their highest levels in over two decades as Treasury yields rose.
As of the week of September 27, 2023, the interest rate for a 30-year fixed mortgage peaked at 7.41%, the highest since the end of 2000. The 30-year fixed jumbo mortgage interest rate jumped to 7.34%, the highest rate on record for the jumbo rate from back in 2011.
We already know that high mortgage rates have impacted the housing market and made it more expensive and difficult for buyers to get approved for a mortgage. But buyers may finally get some relief next year, as a dip in mortgage interest rates may be part of 2024.
The rate decline may start in late 2023 and continue into 2024. MBA analysts forecast mortgage rates to decrease to 5.4% by Q4 2024.
This means that buyers in Denver can secure a much lower rate for their mortgage next year. Even if the average price for a home increases, no matter how slowly, lower mortgage interest rates will make it easier for buyers to get approved for a home loan in 2024.
The Outlook for Denver Home Buyers in 2024
The big question on the minds of local buyers is: Will 2024 be a good year to buy a home in the Denver area?
From a market standpoint, buying a home could be a great time. The housing market is now exiting the rare downturn phase mentioned above. Home buyers who purchase over the coming months or early 2024 could avoid paying higher prices.
Mortgage rates, meanwhile, are expected to hover within their current range through the end of this year, with some easing possible in 2024. In their latest “Economic, Housing and Mortgage Market Outlook,” published in September, Freddie Mac’s analysts said they “expect mortgage rates to remain above 6% for the rest of the year.”
The Mortgage Bankers Association recently predicted that the average rate for a 30-year fixed mortgage would decline gradually next year, perhaps dropping into the upper 5% range by midyear.
Only you can decide if the time is right to buy a house. This still presents challenges for buyers, especially when it comes to inventory. But for those buyers who want to capitalize on positive equity growth for the long term, 2024 could be an excellent time to enter the market.