Denver Real Estate Remains Strong – Firmly A Seller’s Market
September 16, 2021 | CHR WEEKLY
The 2021 Denver Metro real estate market started off at a torrid pace. While the chaos has settled, buyer activity remains strong, inventory low, and prices appear to be moving into normal seasonal patterns after the Spring surge.
For the first time ever and with 4 months left in the year, the number of home showings crossed the one-million-mark year to date in the Denver market. This is 50% more buyer activity than any previous year.
Over the last 14 weeks however, buyer activity has settled into the “just above normal” range for the Denver market. With low inventory, this still means a large buyer pool is competing for fewer homes leading us into a fall and winter market that is most likely shaping up to remain busy and relatively fast for buyers and sellers.
Early 2021 saw the massive surge in buyer activity and only a normal year for the number of homes listed for sale. This imbalance drove prolific appreciation through the simple supply/demand equation. By mid-May of this year, single family detached properties were selling for 34%, or $176,570 higher on average than the same time last year.
As buyer activity has settled down a bit however, this gap has narrowed as the 2021 average home price pulls back from the highs of early summer, moving into a more normal seasonal pattern. This week, the average sold price ended 14.9% or $88,363 higher than the same time last year.
Interest Rates–As a rule, unusual buyer activity is driven first and foremost by interest rates. As rates remain low, buyer activity in all price ranges will remain strong. As rates rise, a slow down in buyer activity will immediately follow, allowing inventory to rise and less upward pressure on prices. Most economist believe interest rates will remain low through 2022. This most likely means continued home value appreciation at modestly high rates over the next 18-24 months.
Inflation–This has become the buzz word over the last 6 months as a combination of government spending floods the economy with capital and worldwide supply chain constraints and distribution challenges create upward pressure on consumer priced goods. Inflation can tend to have a surprising impact on real estate prices however. As inflation rises, rental rates tend to rise. Historically this has more renters wanting to purchase homes to avoid being subject to rising rental rates. And, we are now seeing very sophisticated investors with enormous sums of capital move money into residential real estate asset purchases, buying properties for long term cashflow and appreciation.
Please let me know if I can help answer any questions for you about the real estate market or your own housing needs.
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