Jason Cummings | May 12, 2022
real estate insights
As we all have experienced in the past 3 years or so, change is inevitable - and sometimes can be quite frightening. Change and growth is what makes us human and humbly reminds us that we can never get too comfortable. Since migration and transformations are constantly happening all around us, it is imperative to keep up with those changes in order to learn about how it impacts the ever changing Denver Real Estate Market.
Here are some of the most important recent market changes to take note of. First, the average close price during the month of April was up 9.02% from March at just over $700,000. This trending increase of price shows a staggering difference compared to the average close price 5 months ago in December 2021 which was $629,479. Additionally, the amount of active inventory in the market in the month of April was up an astounding 81.16%. Even with this dramatic influx of inventory, Denver Metro Association of Realtors express confidence that there are no signs of a major market cooldown in the immediate future as there is still a high demand for housing. This means that homes are still selling quickly - with the average days in the MLS decreasing by 21.43%, making the average Days On Market a mere 11 days on average.
Along with the rise in average close price on a Denver home also came a rise in mortgage rates. According to Nicole Freidman’s Wall Street Journal Article titled Decade-High Mortgage Rates Pose Threat To Spring Housing Market, “...mortgage rates are rising at their fastest pace in 35 years… [with] the average rate on a 30-year fixed-rate mortgage [climbing] from 3.22% in early January to 5% as of [mid-April]”. With interest rates on the rise throughout the country, these extra hundreds of dollars being spent on an increased monthly mortgage rate can inflate one’s cost of living to become even higher than it already is - and potentially push homes outside of a buyer’s budget.
This leads to another core component of Denver Market Trends which is the average income and cost of living of Denver residents. Currently, single Denver residents on average are bringing home around $72,000 a year (Average Salary in Denver, CO ). However, given our country’s current economic circumstance with regards to inflation, the cost of living continues to rise in Denver as well as all over the country. According to PayScale.com, the cost of living in Denver is already 12% higher than the national average which is $61,334 a year on expenses (World Population Review). A statistic like this could potentially be a strong push factor for those who have experienced financial hardship during the past few tumultuous years and are looking to lower their expenses by moving somewhere more affordable. Subsequently, we have already started to see this push factor getting to work. During the year of 2021, Colorado gained a total of 27,000 new residents, a record low since 1990, and Denver County had a net population change of -6000 residents (More People Are Leaving Colorado Rather Than Moving In).
While the future is unpredictable, the one thing that remains constant in life is change. The Denver Real Estate market and its trends are continually evolving and changing – currently making it a very challenging yet lucrative market. All in all I think we can expect the market to level off with appreciation continuing at a slower more sustainable pace.
Stay up to date on the latest real estate trends.
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Published on June 1, 2022 by Jamie Forbes at Redfin. Why home prices have dramatically increased in recent months.
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