Denver, CO Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Fri, Jul 23 2021

Jump To Another Year In The Denver Real Estate Market:

The Denver real estate market appears on track to pace the national market over the remainder of 2021. If for nothing else, real estate in Denver has outperformed most markets across the country for the better part of a decade, and the Mile-High City appears to be less susceptible to volatile shifts in the market brought about by the Coronavirus. The city was already receiving support from several positive indicators before issuing “shelter-in-place” orders last year, and positive momentum is already building in 2021. Denver’s unemployment rate, in particular, fared better than most markets over the course of the pandemic, which should facilitate more housing activity sooner rather than later.

All things considered, the Denver real estate market is positioned to return to “normal” faster than many of its counterparts, which begs the question: Is Denver a good real estate investment? While the answer is ultimately up to the investor, this city is currently brimming with potential for those who know where to look. The Denver real estate investing community should be able to capitalize on today’s market as long as they listen to what it’s saying.

Denver Real Estate Market 2021 Overview

  • Median Home Value: $543,544

  • Median List Price: $608,333

  • 1-Year Appreciation Rate: +13.3%

  • Median Home Value (1-Year Forecast): +16.1%

  • Weeks Of Supply: 3.6 (-2.2 year over year)

  • New Listings: 1,566 (+4.4% year over year)

  • Active Listings: 5,020 (-40.10% year over year)

  • Homes Sold: 1,426 (-2.5% year over year)

  • Median Days On Market: 5.0 (-5.2 year over year)

  • Median Rent: $1,760 (+6.6% year over year)

  • Rental Vacancy Rate: 6.2% (+2.6% year over year)

  • Price-To-Rent Ratio: 25.73

  • Delinquency Rate: 2.9% (-1.2% year over year)

  • Denver-Aurora-Broomfield Unemployment Rate: 5.9% (latest estimate by the Bureau Of Labor Statistics)

  • Denver County Population: 727,211 (latest estimate by the U.S. Census Bureau)

  • Denver County Median Household Income: $68,592 (latest estimate by the U.S. Census Bureau)

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Denver housing market trends

2021 Denver Real Estate Investing

The Mile-High City has been at the forefront of the national recovery since 2012, which has many people asking the same question: Is it a good time to buy a house in Denver? The answer is inherently tied to each investor and their particular situation. Still, the fact remains: today may be a great time for real estate entrepreneurs to consider building a long-term, passive-income portfolio. Otherwise known as a buy-and-hold exit strategy, starting a rental portfolio is perhaps more attractive in a post-pandemic marketplace than before the impact of COVID-19 on the real estate market. In particular, the following indicators are tilting the scales heavily in favor of passive income investors:

  • Interest rates on traditional loans are historically low

  • Years of cash flow can easily justify today’s higher acquisition costs

  • The price-to-rent ratio suggests high home prices will increase rental demand

For years, rehabbing was the most common investment strategy used by Denver real estate investors. However, the market has shifted, and home prices suggest a longer investment horizon is more viable.

Long-term investors are awarded the ability to navigate today’s higher prices with lower interest rates. As of June, the average rate on a 30-year fixed-rate loan was 2.98%, according to Freddie Mac. While interest rates are up slightly year-to-date, it’s important to remember that they are still historically low. As a result, the cost basis for real estate in Denver is lower, making homes more affordable due to recent appreciation. Investors who take advantage of today’s mortgage rates could easily detract thousands of dollars from the overall cost of their purchase. More importantly, however, those who use today’s interest rates to acquire a rental property could very easily increase their monthly cash flow from properties placed in operation. When monthly mortgage obligations are lowered, landlords can increase their cash flow.

In addition to lower borrowing costs, investors intent on building a rental property portfolio can justify today’s higher prices with cash flow. Whereas rehabbers and flippers need to acquire homes below market value to pad profit margins, rental property investors can stand to acquire homes at today’s high prices to pay their mortgages down with other people’s money each month. The cash flow can help offset the higher acquisition costs in as little as a few years while building equity in a physical asset.

Denver real estate investors should take solace in the city’s 25.73 price-to-rent ratio, as it is currently much more affordable to rent than own. As a result, vacancies will be easier to avoid. Not only that, but listings are harder to come by in today’s market, too. The unique combination of affordability and a lack of listings suggest rental property owners will see plenty of demand for the foreseeable future, at least until more homes are constructed.

The real estate investing community is lucky to have several viable exit strategies at its disposal. Still, none appear more attractive than building a proper rental property portfolio at the moment. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.

2021 Foreclosure Statistics In Denver

According to Attom Data Solutions’ Q1 2021 U.S. Foreclosure Market Report, a total of 33,699 U.S. properties received a foreclosure filing (default notices, scheduled auctions, or bank repossessions) in the first quarter of this year. According to the latest research, nationwide foreclosures are up 9.0% from the last quarter of 2020 but down 78.0% from this time last year.

“The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

There’s no doubt about it: investors should expect to see an influx in foreclosures over the remainder of this year. However, the Denver real estate market may be slightly more insulated from an increase in distressed homeowners. At the very least, Denver’s unemployment rate has fared better than most other cities across the country. With more people employed and the economy slowly improving, there’s a good chance Denver could avoid a worst-case scenario. While foreclosures will increase, they may do so at a slower pace than many of their counterparts.

2021 Median Home Prices In Denver

The median home value in Denver is $543,544. Nonetheless, today’s home value doesn’t tell the whole story. No more than a decade ago (June 2011), the median home value in the Denver real estate market dropped as low as $232,000. Thanks largely to an expanding economy, increasing sentiment, and—ironically—a lack of available inventory, real estate in Denver has ridden a wave of positive indicators to get to where it is today, to the tune of a 134.2% increase over the course of 10 years. To put things into perspective, the median home value in the United States increased 77.7% over the same period of time, and is now approximately $293,349, according to Zillow.

Despite historical appreciation rates, home prices in Denver are expected to increase as we get deeper into 2021. The local market’s meager 3.6 weeks of supply suggest competition is rampant. In fact, the Denver real estate market is leaning so heavily in favor of sellers that prices are expected to increase as much as 16.1% over the next 12 months; there simply aren’t enough homes to satiate demand, and owners can increase prices accordingly. As long as interest rates remain attractive and existing inventory is tight, prices will increase. Therefore, it’s safe to assume prices will increase in Denver for the foreseeable future.

The latest rate of appreciation has investors asking one question: Is Denver real estate overvalued? The answer isn’t so simple. While prices are higher than they have ever been, sentiment, demand, and supply all suggest prices will increase by as much as double digits. Therefore, there still appears to be room for investors to benefit from appreciation.

Denver Real Estate Market: 2020 Summary

  • Median Home Value: $465,466

  • 1-Year Appreciation Rate: +1.7%

  • Median Home Value (1-Year Forecast): -1.7%

  • Median Rent Price: $2,150

  • Price-To-Rent Ratio: 18.04

  • Denver-Aurora-Broomfield Unemployment Rate: 12.1% (latest estimate by the Bureau Of Labor Statistics)

  • Denver County Population: 727,211 (latest estimate by the U.S. Census Bureau)

  • Denver County Median Household Income: $63,793 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 9.64%

  • Foreclosure Rate: 1 in every 8,047 (1.2%)

Denver Real Estate Investing 2020

Entering into 2020, Denver real estate market trends suggested the Mile High City was on the verge of a very active year. The market was firing on all cylinders as demand increased in the face of rising home values. However, the impact of COVID-19 on the real estate market threatened to bring an end to nearly a decade of progression. Once the Coronavirus was officially declared a pandemic, real estate in Denver was brought to a halt in weeks. Fear and uncertainty prevented anyone from taking action: buyers, sellers, and lenders. When a lot was still unknown about COVID-19, buyers refused to tour homes, sellers took their listings off the market, and underwriters weren’t working due to government-mandated “stay-at-home” orders.

Fortunately, the market stagnation didn’t last long. In an attempt to stimulate activity, the Fed dropped interest rates well below three percent. The move convinced many buyers to get off the fence, as borrowing costs were too attractive to pass up. However, it is worth noting that more buyers than anyone could have ever imagined started looking for homes. Denver’s lack of inventory quickly turned the newly created demand into competition. In response, homeowners increased asking prices accordingly. Over the last three quarters of 2020 (starting when the Fed lowered interest rates), the median home value in the Denver real estate market increased 4.8%; that’s in addition to the eight consecutive years of price increases that took place since The Great Recession.

All things considered, real estate in Denver was testing new highs each month, and investors saw profit margins on flips grow smaller. As prices rose over the course of 2020, flips netted investors fewer proceeds. To combat higher acquisition costs, the Denver real estate investing community turned to long-term exit strategies. In particular, investors took advantage of historically low borrowing costs by buying rental properties. With interest rates lower than they had been in years, investors in 2020 could simultaneously justify higher home prices and increase monthly cash flow from rental properties in operation. That’s not to say flipping wasn’t a reliable source of income for real estate investors in Denver, but rather that market indicators favored rental property owners in 2020.

Denver Real Estate Market: 2018 Summary

According to Denver real estate news, the Mile-High City not only did well for itself in 2018, but it also thrived. Most notably, the city became the beneficiary of significant appreciation. According to the experts at Zillow, in the six years leading up to 2018, the median home value increased somewhere in the neighborhood of 90.0%. There’s no doubt about it: the Denver real estate market was in a much better place today than it was even just a few short years prior. At the same time, opportunity knocked for savvy investors looking to capitalize on the Rocky Mountains’ fast-paced market. Those who took advantage of the opportunity are most likely still seeing the benefits today.

Denver Real Estate Investing 2018

According to Zillow’s Home Value Index, the median home value reached $407,100. To get to that point, median home values increased by 8.9% over the previous year. It is worth noting, however, that values have risen all the way to today. Anyone who purchased in 2018 thinking most of the city’s appreciation had already taken place was pleasantly surprised, especially if they acquired a distressed home at a discount.

At one point, Denver had somewhere in the neighborhood of 594 homes that were either in foreclosure or at risk of it. More specifically, those homes were either in pre-foreclosure, up for auction, or were already repossessed by the original lender.

According to RealtyTrac, “the median sales price of a foreclosure home was $277,950, or 14% lower than non-distressed home sales.” To put the potential for savings into perspective, savvy real estate investors could save an average of nearly $47,000 if they choose to buy a distressed property.”

Denver Real Estate Market: 2016 Summary

  • Median Home Price: $369,000

  • 1-Year Appreciation Rate: 9.1%

  • 3-Year Appreciation Rate: 41.3%

  • Unemployment Rate: 3.3%

  • 1-Year Job Growth Rate: 3.1%

  • Population: 2,767,737

  • Median Household Income: $64,439

Denver Real Estate Investing 2016

Life was good in the Denver real estate market in 2016. As one of the most stable markets in the United States, Denver was firing on all cylinders in 2016, with appreciation rates skyrocketing, employment rates improving, and new housing construction booming in every new quarter. In 2016, the median home price for the Mile-High City was about $369,000, compared to the national average of $215,767 and $30,000 more than the same period in 2015. All signs pointed to a bright future, and nothing has changed since then.

The first quarter of 2016 was very rewarding for investors and homeowners. Along with blossoming appreciation rates, the Denver real estate market continued to make headlines as one of the hottest housing markets in 2016, with ranking the rising city as one of the best housing markets in their annual market performance list. If that wasn’t enough, the National Association of Realtors identified Denver as one of the top 10 purchase markets for millennial homebuyers at the time.

Along with impressive appreciation rates, the unemployment rate during the first quarter of 2016 was 3.3%, compared to the national average of 5.0%. However, the cherry on top was the 3.1% increase in the one-year job growth rate, which was 1.1% higher than the national average, showcasing an improving economy.

For the first quarter of 2016, homeowners paid approximately 13.9% of their income to their mortgage payments. This is not only less than the national average (14.5%) but a slight decrease from their historical average of 14.2%. Despite investments growing, home affordability in the Mile-High City was pronounced.

Denver Real Estate Market Summary

The Denver real estate market was at the forefront of the national recovery over the last decade, and the Mile-High City appears poised to continue leading the pack. Most notably, real estate in Denver is propped up by a strong economy, one that didn’t see its unemployment rate increase as much as the national average. For whatever reason, Denver appears to be slightly insulated from the pandemic, which bodes well for the city moving forward. In fact, look for the Denver housing market to be one of the first to come out of the “shelter-in-place” orders with steady momentum.

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