With 2021 ending as another record year for the Denver real estate market, many are wondering if it is possible for the market to continue at this pace. Last year, 63,684 homes were sold in the Denver metro area, more than any other year on the books. While we know booming markets don’t stick around forever, experts are predicting more growth in 2022.
Here’s a look at some forecasts and trends for the Denver real estate market in 2022.
Drastically Low Inventory
The hot seller’s market in Denver over the last few years is driven by low inventory, and that won’t change any time soon. In fact, the months-of-inventory (MOD) figure for January 2022 was just 0.42 months. That’s the lowest January figure on record for the Denver real estate market.
At the start of January 2022, the Denver Metro area had only 1,477 active properties on the market. To make matters worse, the recent Marshall Fires destroyed over 1000 Boulder-area homes, taking away potential inventory and adding more buyers into an already spread-too-thin market.
To turn the tables and shift Denver into a buyer’s market, the MOD would need to reach six months. It doesn’t seem likely for that to happen any time soon. Forecasts for the rest of 2022 suggest that inventory will continue to be an issue that drives up home prices.
Prices on the Rise
In 2021, prices in the Denver real estate market grew on average 16.7% over 2020. With the sustained lack of supply and increased demand for homes, predictions for 2022 have appreciation in the double digits for the second year in a row. The last time the market saw back-to-back growth of that magnitude was 2015-2016.
The predicted continued increase in price is, of course, great news for sellers who will practically be able to name their price and still sell in record time. However, buyers are feeling extremely frustrated. With the median sales price in January sitting at $540,000 buyers of low-to-mid income could be priced out of the market, especially as interest rates begin to creep back up this year.
Rebounding Interest Rates
While interest rates have been low since March 2020 in an effort to help provide economic relief to Americans impacted by the COVID-19 pandemic, persistently high inflation will drive rates back up throughout 2022. Even with the predicted increases, rates will remain lower than they were prior to the pandemic.
Still, interest rates will be a key driver of increased housing demand in 2022. While the incredibly low rates of the last two years enticed new buyers into the market, the looming rate increases will be just as motivating to buyers during 2022. Just a quarter-point rate hike can drastically reduce buying power, so experts predict buyers will be in a rush to purchase a home before their budget is impacted.
Is Denver Worth the Investment?
Since there are indications of prices stabilizing any time soon, many are wondering if Denver is worth the investment. The short answer: absolutely. Here’s why:
For the last ten years, real estate values in Denver have grown by over 143%. That’s an annual average of 9.3%, putting Denver in the top 10% in the country for real estate appreciation.
Growing alongside property values in Denver is the population. The population has grown by roughly 21% over the last decade. In the last two years, in particular, Denver has seen an influx of new residents leaving larger cities like New York and Los Angeles in search of more space and a slower-paced life. There are many reasons why Denver is an attractive place for those looking to relocate.
Stable Job Market
One thing adding to the allure of the Denver real estate market is the stability of the job market. While unemployment was a concern for many during the pandemic, the job market in Denver, particularly in the tech sector, managed to thrive. The city has maintained one of the lowest unemployment rates in the country and ranks sixth in the United States for the number of jobs retained during the pandemic.
Quality of Life
Many aspects of the Denver way of life are drawing people in from other areas. The city is home to a rich cultural area, and downtown is walkable. Denver also has the largest city park system in the nation, with 14,000 acres of mountain parks and 2,500 acres of natural areas. It sits nearly centrally located in many of Colorado’s premier resort towns. With more and more people able to work remotely, Denver has become the top choice for relocation, particularly among millennials with values that align closely with the Denver culture.
Should You Buy Denver Real Estate in 2022?
As the city continues to be one of the fastest-growing cities in the country and has one of the most stable economies, 2022 is still a good time to buy into the Denver real estate market. Because the market is currently difficult to navigate, you may have a better buying experience if you use an experienced real estate professional to help with your property search.
Try an Agent
A real estate agent has access to the MLS database, which can be used to make your search more streamlined and efficient. The agent can put in your search parameters and generate a list of properties that meet your needs. This will save you time in searching multiple websites and driving through neighborhoods looking for “For Sale” signs.
An agent will also help you with what could potentially be a challenging offer submission and contract negotiation process. Because Denver is such a seller’s market, you will most likely end up bidding against other interested buyers or may need to negotiate back and forth to agree on a price and terms for the sale. Your agent will help you through the entire purchase process, and clear through until your closing.
Find the Right Agent For You
The talented team at This Must Be the Place is ready to help you find the Denver property of your dreams. Contact us