The History of Denver Home Prices
In November of 2010, the median price of a single-family home in the Denver metro area was $225,000. Now, ten years later, the median price has jumped to $508,000. Denver home prices have doubled and there is no sign of that slowing down. Even in a global pandemic, home prices have continued to rise. There’s a reason for that which can be explained with the basic law of supply and demand. The Denver home prices doubled in the past ten years because our inventory numbers have continued to decrease. There simply aren’t enough homes to sell to everyone who wants to buy.
There were 15,469 single-family residential homes in the Denver metro area in November of 2010. Fast-forward to today and there are only 1,495 single-family residential homes on the market. The law of supply and demand as it relates to real estate is that as there is more demand for purchasing a home and the supply decreases, the price will rise. The Denver metro area has been built out. There aren’t many empty lots waiting for development inside the city limits, especially for single-family homes. Many people aren’t selling their homes for various reasons. Most homeowners feel that life is just too uncertain right now. Also, with the limited amount of inventory many sellers are concerned that if they sell, they won’t be able to find a replacement property.
Are Denver Home Prices Affordable?
Right now the average monthly mortgage payments in Denver are now equal to 2015 due to low interest rates. The low interest rates have kept Denver home prices affordable, despite the fact that they have risen 126% in the past 10 years. These historically low interest rates have driven demand for purchases and refinances. With many people stuck at home, they are realizing that their space needs to be revamped to accommodate a home office or space for the kids to do remote learning. Many homeowners have taken advantage of the low interest mortgage rates and taken some of their equity out of their homes to make improvements. In most cases, these improvements are increasing the value of their home so they are just using that equity they took out and put it right back into the value of the home.
Another factor to consider is that many mortgage servicers pay the property taxes for a home to the county. Denver has the 3rd lowest property tax rates in the country. For people who are homeowners in Dallas, Texas they are paying $11,500 in property taxes on a home costing $500,000. In Colorado, the property taxes on a $500,000 property are approximately $2,650. That difference alone raises the mortgage payment on a $500,000 home by $737 a month!
Will Denver Home Prices Double Again?
With the limited amount of inventory, experts are forecasting that the average price of a home in the Denver metro area will continue to rise. Denver and the surrounding cities have repeatedly made the lists for “The Best Places to Live.” Denver has a reputation for being among the last to feel economic downturns and one of the first markets to recover. Denver is the #9 market for jobs recovered with 56% of jobs recovered from the pandemic as of September 2020.
It also has one of the mildest climates in the country, with temperatures averaging 32 degrees in the winter and 78 in the summer. Many Fortune 500 companies have moved to Denver in the past 10 years, bringing people in droves to relocate to Denver. Silicone Valley software giant Plantir, VF Corp (home to brands like North Face and Smart Wool), and Pointsbet Sportsbook are just a few major corporations that have recently moved their corporate headquarters to Denver. The mild climate, strong workforce, and high quality of life make the Denver metro area a prime location for people looking to relocate.
All in all, Denver home prices will continue to rise. Many people who have been “waiting for the bubble to burst” have now found themselves priced out of the market. However, if you are looking for a good investment that will grow your money I suggest that you get in the game before it’s too late. Make your money work for you!