The Denver housing market ended 2022 far closer to normal levels than it’s been in the last two years. The excessive highs of the pandemic-induced low-interest rate buying have subsided, inventory is slowly creeping up, and Denver housing prices remain steady.
In 2019, we saw a similar trend as pricing continued upward, albeit at a slow rate, and sales remained high. Then, the pandemic brought a range of unusual factors into play that disrupted what may have been an interesting situation in its own right.
Denver was already booming for years before 2020. That’s thanks to an affordable cost of living, rapid growth, and promising prospects in the fields of health sciences, aerospace, and technology.
The city was attracting professionals from more expensive metropolises long before remote work became the norm.
What does this recent turn of events mean for the Denver real estate market in 2023, though? Will things continue to normalize, pick up where they left off in 2019, or decline way beyond the equilibrium of past years?
Keep reading to discover some expert opinions and predictions surrounding the future of real estate in Denver.
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1. This Year Will Bring More Balance to the Denver Housing Market
The most pressing question on the minds of realtors and homeowners alike is how long the slowdown in prices will last. Alayna Alvarez of Axios explores how prices are changing in the Denver area, based on an analysis of Zillow data.
This is what she reveals:
- Average home prices across most of the Mile High area in late 2022
- The biggest price drops occurred in ZIP codes 80457 and 80216
- Boulder County experienced the biggest decrease overall
- Home prices are still increasing in areas west of Denver
- Prices increased by 8.5% in ZIP code 81143 near Moffat, southern Colorado
We are bound to see many changes in Denver real estate during 2023. Yet, the market remains stable and strong, says Libby Levinson-Katz of the Denver Metro Association of Realtors.
In this light, forecasters predict Denver Metro sales prices may rise by up to 4.2% this year, thanks to the following:
A Stable Market
The Zillow report predicts relatively flat prices for the year, and Nicole Rueth, senior vice president at The Rueth Team, agrees. She predicts fewer listings, slow demand, and low inventory will dominate the first quarter of the year
Her predictions for quarter two include more new listings, greater demand, and lower rates. The rest of the year should see normal fall trends come into play.
Increased Leverage for Homebuyers
Realtor, Jeremy Kane, at eXp Realty explains that sellers might feel short-changed as home price increases slow down. That’s only because they’ve enjoyed record-breaking home appreciation in recent times.
He emphasizes that the slower appreciation seen lately doesn’t represent a loss in value. Rather, it is simply a sign of the market settling as it returns to normal.
The fierce bidding wars and offers way above asking are becoming a thing of the past as prices normalize, giving buyers more say in real estate transactions.
Lower Mortgage Rates and Pent-Up Demand
Redfin and other experienced forecasters predict that interest rates will decline slowly throughout 2023. Lori Abbey of milehimodern expects this may create greater excitement among sellers and buyers alike.
More affordable prices than last spring mean some buyers might eventually get off the fence and commit to finding their dream home.
Relatively Low Inventory
New construction is vital to offset Denver’s constrained housing supply, according to another milehimodern broker, Rachel Gallegos.
Amid the interest rate hikes of 2022, more homeowners opted to stay where they are to avoid losing their current low-interest-rate mortgages.
This has curtailed the availability of inventory in Denver, paving the way for new construction to fill current home buyer needs.
Increased Competition
Abbey expects competition for properties to hot up around the middle of the year. This could lead to interesting times for both buyers and sellers.
2. Inventory Will See Big Growth
A second article, featured on the PR Newswire website, focuses on the Knock Buyer-Seller Market Index and shows that sellers will maintain their advantage in the eastern states, while buyers out west may enjoy more leverage.
- This index analyses 6 key housing market metrics to determine which markets favor buyers vs sellers, as follows:
- The ratio of average sale to asking price
- Number of homes sold
- Number of active listings
- Median days on market
- Median sale price
- The rolling supply of homes in a given month
As the U.S. housing market continues to evolve in favor of buyers. This report ranks Denver as one of the top five buyers’ markets for 2023, along with Dallas-Fort Worth, Colorado Springs, Las Vegas, and Phoenix.
Sellers will fare best in the Harrisburg, Hartford, York, and Fayetteville real estate markets.
As 2022 wound up, inventory rose in 80% of the largest housing markets, and all but two of these evolved at least slightly in favor of buyers.
As the situation progresses, forecasts predict that there will be at least 36 buyer’s markets across the nation, 23 neutral territories, and 41 seller’s markets.
Other predictions revealed by the Knock index, are:
2022’s Hottest Markets Will Favor buyers in 2023
Overall, pandemic relocation hotspots where prices grew rapidly at the time, will favor buyers more this year. Mid-sized markets could become the new top-performing areas provided they offer affordable prices and good employment opportunities.
These markets should see more temperate home price growth, although prices should still end up 38% higher than pre-pandemic levels.
Experts predict inventory in Denver should grow by almost 100%, while Charlotte, NC could see up to 148% more homes for sale.
Denver as a Top Buyer’s Market for 2023
Median home prices in the Denver-Aurora-Lakewood areas of Colorado spiked at $555,000 in 2022. They’re expected to rise by another 0.7% during 2023, with around 3.8 months’ supply of housing available by the end of the year.
Last year, homes for sale in Denver spent just 6 days on the market, this will escalate to 36 days by November this year.
3. More Affordable Housing Might Be On Its Way
Our final find, by the reporter Russel Haythorn, focuses on good news for home buyers searching for more affordable homes in the hot Denver housing market. The city is working hard to alleviate the current affordable housing issues, and there’s finally light on the horizon.
Denver’s Department of Housing and Stability (HOST) has plans afoot for a multi-million dollar, 253-unit apartment and townhouse complex at the corner of Holly Street and 38th Avenue.
The homes will offer the following configurations:
- 84 one-bedroom units
- 104 two-bedroom units
- 36 three-bedroom units
- 29 four-bedroom two-story townhomes with a garage
The city will limit occupancy to people earning between 30% and 80% of the median income for the area.
Patty Raynolds took a stroll around the proposed site and highlights that the development is an excellent opportunity to add diversity to this neighborhood.
She feels the development will help people get back on their feet after recent trying times by helping them to live in an affordable, yet respectable home in a good area.
Vernon Austin, who grew up in Park Hill in the 90s, sees abundant potential in the site, too. He mentions that what was once considered the bad side of this area will quickly become elevated by a development of this nature.
Denver’s Safety, Housing, Education, and Homelessness Committee has already approved a proposed loan agreement between HOST and the Delwest Development Corporation for about $8 million in gap financing.
The final step is the Denver City Council vote. If they approve this finance, it will be the largest affordable housing gap financing amount ever passed by the city council.
Key Takeaways
Our research shows that while prices might not reach the high escalations seen in the last two years any time soon, there’s little reason for concern. Overall, Denver housing prices are 30% higher than in March 2020 and show an increase of 151% since 2015.
A slowdown in the Denver real estate market is a sign that things are returning to normal. This makes things a lot easier for buyers, especially amid concerns over a recession and increased mortgage interest rates.
Increasing inventory, a slower market, and more gradual price increases may lure hesitant buyers out of the woodwork after the frenzied price wars of 2020 to 2022.
Newly constructed homes are vital to make up for the shortfall caused by hesitant sellers. The city is also making big moves in this direction to assist those who find themselves priced out of the Denver housing market.
While homeowners might not realize the huge returns and fast sales of recent times, they’ll still sell their homes if they’re offering good value for these cautious home buyers.
The Denver housing market remains an excellent choice for home buyers seeking to enjoy the excellent job opportunities, diversity, and wealth of entertainment on offer in this popular Colorado city.
