The Denver, Colorado housing market was one of the big real estate stories of 2014, with home prices in the area rising by as much as 13% according to some sources.
While prices probably won’t rise by double digits in 2015, the Denver real estate market is still expected to make gains. It also showed up on a top-10 list of best places to make a home buying investment in 2015.
Here are the latest housing stats and trends for Denver, Colorado, along with an economist’s prediction for the rest of 2015.
Denver Housing Market Trends at a Glance
According to Zillow.com, the average home price in Denver’s housing market rose by more than 13% over the last year or so. Their chief economist’s prediction calls for another 4.2% gain in home prices through the end of 2015. (Just note this is a prediction and should not be viewed as fact.) This reflects a broader, national cooling trend for home prices that is expected over the next year.
Denver was one of few inland (non-coastal) housing markets that experienced double-digit price gains during 2014. But don’t expect that level of appreciation going forward. In 2015, the double-digit increases will probably be limited to a handful of housing markets in California and the Southwest.
Each month, Realtor.com publishes a monthly housing summary with data and trends for 200 of the biggest metro areas in the U.S. According to their latest report, which contained data through the end of December 2014, Denver had the biggest annual increase in its median list price. The median listing price for homes in this metro area rose by a whopping 38.8% over the last 12 months or so. It’s worth repeating — that was the largest year-over-year gain of 200 metropolitan areas in the U.S.
The total number of homes listed for sale in the Denver area dropped 27.5% during the same 12-month period, according to Realtor.com. This is partly what accounts for the tremendous increase in median list prices. Housing inventory appears to be shrinking in the area, while demand is growing. This tilts the supply-and-demand scales toward the demand side, thus driving home prices upward.
Zillow reports that the median home value for the Denver housing market is $291,700. That’s an increase of 13.2% from the same time last year.
What’s Moving the Market in 2015?
What can we expect from the Denver real estate market in 2015? We offered one economist’s prediction above, that prices would rise by a more modest pace compared to last year. Here are some of the other factors that will affect the Denver housing market in 2015.
1. Supply and demand. According to REcolorado, the largest multiple listing service (MLS) in Colorado, housing inventory in the Denver area declined throughout the fourth quarter of 2014 and ended the year at a record low. This comes at a time when demand for housing is on the rise in the metro area. This real estate trend should put upward pressure on home prices in 2015, but to a lesser degree when compared to 2014.
2. Population growth. Denver’s population has grown steadily over the last few years, and this is expected to continue for the foreseeable future. A strong economy and good job market attracts residents from elsewhere in the country. This bolsters housing demand and supports home values over time. It also relates back to the supply and demand picture mentioned above.
3. Job growth. Denver’s unemployment rate was 3.9% in November, according to the U.S. Department of Labor. That’s down significantly from a recession high of 9.7% during 2010. Currently, Denver’s unemployment rate is well below the national average. Such economic improvements put more people in a position to buy a house, which drives demand and sustains home values.
4. Low mortgage rates. Mortgage rates have been hovering at or below 4% for months now. They are expected to remain low through the first quarter of 2015, and possibly beyond. The Federal Reserve seems to be in no hurry to raise the federal funds rate, which banks use when lending money to each other. As a result, Denver home buyers should be able to enjoy low mortgage rates for weeks and months to come (see disclaimer below).
Disclaimer: This housing market report contains forecasts and predictions for the Denver real estate market in 2015. It also contains forward-looking statements regarding mortgage rates and other economic conditions. Such statements were based on third-party data, commentary and opinions. Forecasts and predictions are the equivalent of an educated guess and should not be considered facts or assertions. We make no claims or guarantees about future conditions within the Denver housing market or the broader economy.