After a record-setting year in 2017, experts predict that Denver’s housing market will begin transitioning to more normal conditions in the coming months.
The city’s housing market set records, both for high prices and low inventory, last year. “In 2017, we sold more homes for higher average and median prices than ever before,” noted Steve Danyliw, chairman of the Denver Metro Association of Realtors (DMAR) Market Trends Committee, “and we finished the year with the lowest amount of active listings on record.”
According to the DMAR’s latest market report, inventory stood at 3,854 homes at the end of December— nearly 25% lower than already-low inventory in November and about 10% lower than in 2016. The home squeeze resulted in a continuation of price increases; the average sold price in December was $443.753, a 12% increase over 2016.
But while sellers “should experience continued success in the New Year,” says Danyliw, “the days of double digit appreciation are in the rearview mirror as the rate of price growth continues to slow.”
Patty Silverstein, chief economist with Development Research Partners in Littleton, agrees. “Our expectation is that 2018 may indeed be the year that home prices in metro Denver increase at about the same 5 percentish rate as the nation,” she recently told the Denver Post.
One reason for the slowdown is that Colorado’s net migration is slowing, partly due to higher housing costs. According to the Post, “The state in 2016 saw its first drop this decade in the number of people arriving from other states, while those leaving Colorado hit a record high, resulting in the lowest net-migration number — 30,000 total new residents — in seven years.”
Affordability is also expected to impact sales. A recent report from real estate website Point2Homes ranked Denver among North American cities that are “seriously unaffordable.”
“Point2Homes divided the median home price by the median family income in 54 large cities in Canada, Mexico and the United States,” notes the Post. “Denver’s affordability ratio of 6.6 was the 14th highest in the United States and 18th highest in North America.” Homes priced below $400,000 are in particularly low supply.
Nonetheless, homebuyers who have felt priced out of the home market in recent years have reason to feel optimistic in 2018. Builders are currently offering more townhomes, and condo construction is also expected to see high activity this year.