Don't Look DOWN ↓

Updated: Jan 30

A look back on what happened in Denver’s market in 2021 and what buyers and sellers can expect in 2022.


In 2021, as demand hit an all-time high, new listings went down 5 percent. Add both together and it explains how the metro area ended up with median home prices appreciating 19.78 percent year-over-year in the month of December.


I don’t want to freak anyone out here, but we just rolled into 2022 with a 30-year all-time low of 1,477 active listings and less than ten DAYS of inventory:


Why is inventory so low?


New construction in the metro area has lagged behind population growth since 2011. More recently as prices have risen, there has been a decline of homeowners looking to sell at all. Not because they don't want to move or because it would be difficult to sell, but because existing homeowners would have to become buyers facing high prices and significant competition.


How can demand be so high?

Denver is growing and many households have ample wealth to spend on housing. While cash buyers are out there, most are taking advantage of favorable financing terms that attract qualified individuals into the market. Recently, higher conforming loan limits were set making qualified buyers able to purchase a home for $750,000 putting just 10% down. While forecasters signal higher interest rates in 2022, most predict rates to rise to about four percent.


Demographics. Denver’s population is rising faster than the nation, just as millennials are entering their peak homebuying age. With Colorado being a favorite destination, especially for professionals at companies that adopt flexible working policies, expect the metro area to attract residents from all over for years to come.


Environmental factors and forces. Tragically, the Marshall Fire disaster added to the considerable demand and inventory shortage already here when it destroyed a thousand homes and put hundreds of potential buyers into the market who weren’t intending, or needing, to buy a home just a month ago.

 

This is not a bubble. IT'S A HOLE.


Focusing on the back half of the curve since 2008, the magnitude of the problem and how it has intensified becomes clear.


While the amber trendline for active listings is diving, the blue trendline for closings is rising.