Housing data by DMAR. Housing Forecast is an estimate based on data from multiple sources. While it is deemed reliable, it is not guaranteed.
The Metro Denver housing market remains consistently hot and skewed to property owners. Denver Metro saw a 2.4% increase in the number of homes sold through the third quarter of 2020. While there was a month-over-month seasonal decline in sales, November continued to break records as compared to last year. As of now, the Denver housing market is the second most competitive in the country, according to Redfin. More than 66% of Denver home buyers got into a bidding war in November. That percentage is second only to San Diego.
Across the Colorado housing market, high demand that continues to outstrip inventory has increased the difficulty of finding a home to call your home. There are more buyers than there are houses, resulting in a seller’s market that continues to drive prices up. This trend is largely driven by low-interest rates. According to the Colorado Association of Realtors, the 7,235 single-family homes and 3,266 townhomes and condos for sale across Colorado in November represent totals down more than 60 percent and approximately 46 percent, respectively, from the same month in 2019.
The stats are even more extreme in metro Denver. DMAR’s December Market Trends Report shows that housing inventory has hit a record low. November ended with 3,415 active listings, down approximately 29 percent from October’s 4,821 homes and down a whopping 51 percent year-over-year. If no new houses come on the market, inventory would dwindle in just two weeks. The reason inventory is so tight is that sellers haven’t matched the enthusiasm buyers are showing in this pandemic.
Homes also sold faster last month than a typical November. The average day on the market was 22 days compared to 35 days in November 2019. Detached homes are the preference for many homebuyers today. Last month, the average sold price of a single-family detached home was $615,766 — nearly $83,000 more than a house sold in November 2019, but a slight dip of 1.16% from October. The median price was $513,000, up 14% YTY and down 0.39% MTM.
With an extreme shortage of inventory, the prices are expected to keep rising in 2021. Denver and the entire metro area remains a hot seller’s real estate market in every price point of attached and detached properties. The only exception is attached properties priced over $1 million.
According to Andrew Abrams of DMAR Market Trends Committee, “Every price point in the single-family detached homes remains a seller’s market. Compared to the single-family detached properties, attached properties are selling at a slower pace and have a bit more inventory. All of the price ranges under $1 million are the seller’s market. But, when the property is priced over $1 million, it changes into a buyer’s market.
The most competitive segment of the single-family detached market is the $300,000 to $499,000 price range where it’s getting even more difficult for buyers to compete. Months of Inventory for detached homes in this segment dropped to just over .27, arguably making the Classic Market the most competitive segment of the Denver real estate market, according to DMAR Market Trends.
The Affordability Crisis in the Denver Housing Market 2021
The effect of lower mortgage rates (for buyers) is being evened out by the rate of real estate appreciation. The MSA recorded a 15.51% annual gain in the median price of a single-family detached home sold in November. The rate of appreciation has more than doubled since last year. In November 2019, this rate was 5.52%. Low mortgage rates help but don’t eliminate, the risk that the housing market could still face an affordability crunch if home prices continue to rise at a rapid pace.
If the home prices continue to rise at this rate, many buyers would be priced out of the market. In November 2019, the median price of a single-family home sold in metro Denver was $453,250, according to DMAR. And the average interest rate on a 30-year mortgage was around 3.58%, according to Freddie Mac.
Assuming a buyer provided a 20% down payment, the principal and interest payments on the mortgage would have been $1,654 a month. Contrast that with November 2020, where the median price of a single-family sold was $513,000 and 30-year mortgage rates averaged 2.88% (as we write this). A buyer faced a payment of $1,703, or $49 more a month than a year earlier. Assume that builders and sellers had met buyer demand, keeping prices flat over the year. Lower mortgage rates would have resulted in a monthly payment of $1,505, or a savings of $149 a month.
Not only Denver but the entire Colorado housing market is a hotspot to buy and sell real estate. Due to the surge in demand for homes, average prices for properties have increased in most regions throughout the state. In Colorado Springs, another popular market, low inventory and ever-soaring prices continue to impact affordability. In November, there was an 18% increase in the average sale price, ascending to $429,163, and a 17 percent increase in the median sale price rising to $380,000, with a devastating 60 percent decline in active listings.
Metro Denver Housing Market Report For November 2020
Here are some of the highlights from the latest monthly report of the “Metro Denver housing market” from DMAR. Metropolitan Statistical Area (MSA) reports show housing market statistics that focus on the Denver metro region with a relatively high population density at its core and close economic ties throughout the area. Here are the numbers for November 2020 compared with November 2019.
ACTIVE LISTINGS
(Residential) 3,415 represents the lowest inventory on record. The previous low was December 2017 of 3,854.
(Detached) 1,755 represents the lowest inventory on record. The previous low was October 2020 of 2,643.
CLOSE PRICE — MEDIAN
(Residential) $469,000 represents the highest November on record. The previous record was in 2019 of $420,000.
(Detached) $513,000 represents the highest November on record. The previous record was in 2019 of $450,000.
(Attached) $335,000 represents the highest November on record. The previous record was in 2019 of $312,000.
CLOSE PRICE — AVERAGE
(Residential) ) $549,756 represents the highest November on record. The previous record was in 2019 of $486,012.
(Detached) $615,766 represents the highest November on record. The previous record was in 2019 of $533,107.
(Attached) $391,390 represents the highest amount on record. The previous record was in October 2020 of $391,259.
CLOSED SALES
(Residential) 4,820 closed transactions represent the highest November on record. The previous high was in 2017 at 4,789.
PENDING SALES
(Attached) 1,519 pending transactions represent the highest November on record. The previous high was in 2017 at 1,402.
MONTHS OF INVENTORY (MOI)
(Residential) 0.71 months represents the lowest number on record.
The previous record low was in October 2020 of 0.81 months.
(Detached) 0.52 months represents the lowest amount on record.
The previous record was in October 2020 of 0.61 months.
Infographic Showing Seasonal Month-Over-Month Decline In All The Housing Metrics
Infographic Credits: DMAR
Below is another report of the “Metro Denver housing market” from REcolorado for November 2020. It includes Greater Denver Metro Area Counties: Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park. At the end of November, most of the year-to-date indicators continue to show positive year-over-year gains. The number of Closed Listings year to date is 7% higher than this time last year and (record high). While New Listings remain tight, the year-to-date gap remains at 2% fewer than this time in 2019.
In November, more homes sold than any other November on record.
Throughout the month, 5,236 homes closed a year-over-year increase of 22% and a 19% decrease month over month.
Total pending sales were 4,811, which is 16% more than November 2019 and 18% less than last month.
The average price of a home in the Denver metro area in November was $547,094, a year-over-year increase of 13%.
As compared to October, home prices saw a decrease of 2%.
Single-family residences were sold for an average price of $612,984, a 15% YTY increase and a 2% MTM decrease.
The average price of multi-family/ condos/townhomes was $387,789, a 7% YTY increase and a 1% MTM decrease.
3,695 new listings of homes for sale hit the market, which is 1% higher than Nov of 2019 and a decrease of 40% from last month.
At the end of November, there were only 3,597 Active properties on the market, 47% fewer than last year at this time, and 19% fewer than last month.
Currently, there are 3 weeks of inventory, 4 weeks fewer than this time last year, and unchanged from last month.
Denver Metro homes spent an average of 22 Days in the MLS in November, 13 days fewer than this time last year and 2 days fewer than last month
Infographics Credits: Recolorado.com
Denver Real Estate Market Forecast 2021 (Updated)
What are the Denver real estate market predictions for 2021? Let us look at the home price appreciation trends recorded by Zillow over the past few years. Since 2012, the Denver home values have increased from $233,000 to $484,264, an increase of nearly 108%.
Denver’s strong economy gives buyers the ability to spend more on housing, consequently increasing real estate prices. Home values rose so much over the past six or seven years that affordability became an issue for a person earning the median income in this area. But in 2019, it clearly experienced a cooling trend where home values appreciated by a mere 1%.
The year ended with an average home price of $486,695 and a median of $420,000. This was up less than three percent from 2018, but up almost 90 percent from 2010. As of now, the Zillow Buyer-Seller Index (BSI) shows that Denver is currently the seller’s real estate market which means that demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations.
There are fewer homes for sale than there are active buyers in the marketplace. Similar growth has been recorded by NeighborhoodScout.com as their data also shows that in the past ten years the Denver real estate appreciated by 105.82%. This amounts to an annual real estate appreciation of 7.49%, which puts Denver in the top 10% nationally for real estate appreciation.
During the latest twelve months alone, the Denver appreciation rate has been at nearly 4%, and in the latest quarter, the appreciation rate has been 1.79%. If it remains steady, the annualized rate of appreciation becomes 7.35%. This figure also corroborates with Zillow’s positive forecast, so the home prices in this region are expected to increase between 7-10% in the next twelve months.
Here is the latest housing forecast for Colorado, Denver, and Denver MSA until November 2021. The forecast for 2021 is that the shortage of supply and an increase in the demand for housing from new homebuyers will push the prices higher in the next twelve months.
Low mortgage rates will bolster the home buying market and continue pushing up home price growth. For sellers, now is the opportune time to put their Denver home up for sale. The pricing of homes is trending higher and is more attractive for sellers in the current phase.
Colorado home values have gone up 7.1% over the past year and the latest forecast is that they will rise 10.2% in the next year.
Denver home values have gone up 6% over the past year and the latest forecast is that they will rise 10% in the next year.
Denver-Aurora-Lakewood Metro home values have gone up 7.4% over the past year and Zillow predicts they will rise 6.8% in the next twelve months.
The chart below, created by Zillow, shows the growth of median home values since 2011 and their forecast until November 2021.
Courtesy of Zillow.com
Here is another short and crisp Denver housing market forecast by “LittleBigHomes.com” for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Denver is 76% and it is predicting a positive trend.
They estimate that the probability of rising home prices in Denver is 76% during this period. If this price forecast is correct, the Denver-Aurora-Lakewood, CO home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
The historical change in home prices for Denver-Aurora-Lakewood, CO is shown below for the three-time period. The Denver Home Price Index has increased for the last 26 consecutive quarters (data up to 3rd Quarter, 2018). The highest annual change in the value of houses in the Denver Real Estate Market was 29% in the twelve months ended with the 2nd Quarter of 1978.
The worst annual change in home values in the Denver Market was -4% in the twelve months ended with the 4th Quarter of 1987. The historical change in home values has been calculated until the 3rd Quarter of 2018.
Time Period
Metro Denver Real Estate Appreciation
Last 5 Years
67%
Last 10 Years
83%
Last 20 Years
179%
In conclusion, we can say that these numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? It is quite evident that the ongoing pandemic has not had any major impact on Denver’s housing market.
Home sales & prices have created new records in the entire fall season. The seasonal month-over-month decline has begun but that does not mean the buyer interest is going to die down. It remains exceptionally higher than the same time last year due to record-low mortgage rates.
According to local brokers, the sales could have been even more if they weren’t short of supply. Such is the buyer demand in the Metro Denver housing market. Buyers looking to purchase a detached single-family home have to struggle because there are fewer homes for sale.
The active listings at month-end statistics showed that there were 47% fewer properties for sale year over the past year. As long as buyer demand continues to outpace supply, we will see prices go up. Currently, there are 3 weeks of inventory, 4 weeks fewer than this time last year, and unchanged from last month.
On average, buyers paid more than the full asking price for detached homes and nearly full price for attached homes. There was not a lot of room for negotiations when multiple buyers were competing for the same home. The effect of lower mortgage rates (for buyers) is being evened out by the rate of real estate appreciation.
Low mortgage rates can only help buyers if prices remain flat this year. Otherwise, their monthly payments will increase even though the mortgage rate has dropped to 2.88%. Denver Metro Area is still a strong seller’s market across the board except but the historically low mortgage interest rates are helping buyers as far as housing affordability is concerned.
Extremely low amounts of inventory are helping sellers to move their properties quickly in the $300,000 to $399,000 price range. Furthermore, the Classic Market segment continues to sell for remarkably high percentages of the list price. The average days on market is decreasing month to month, year over year, and year to date.
In a balanced real estate market, it would take about six months for the supply to dwindle to zero. In terms of months of supply, Denver can become a buyer’s real estate market if the supply increases to more than six months of inventory. And that’s not going to happen soon. Months Supply of Inventory in the metro Denver housing market has dropped to 4 weeks, which is very low. Less inventory means home sellers have more power.
Therefore, in the long term, the Metro Denver real estate market remains strong and skewed to sellers, due to a persistent imbalance in supply and demand. The only segment of the market in which homebuyers have the edge are condos priced over $1 million. Nationally, the houisng market is breaking all the records despite the COVID-19 pandemic and the real estate sector has been one of the most resilient areas of the economy during the severe economic shutdown.
Real estate market forecasts given in this article are just an educated guess and should not be considered financial advice. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Many variables could potentially impact the value of a home in Denver in 2020 (or any other market) such as big changes in the distressed, new-construction, or luxury home segments. There are also a wide variety of economic and political factors that can and do impact real estate markets. Most of these variables are difficult to predict in advance.
Denver Housing Market 2020 Summary: Prices | Trends | Supply
Let’s discuss a bit about Denver and do a quick recap of how its housing market has performed in 2020 so far. We shall mainly discuss median home prices, inventory, economy, growth, and neighborhoods, which will help you understand the way the local real estate market moves in this region.
Denver was ranked as the country’s 16th-most walkable city, with 600,158 residents. It has some public transportation and is very bikeable. Downtown is the most walkable neighborhood in Denver with a Walk Score of 93. Due to the low month’s supply of inventory, the Denver housing market is persistently skewed to sellers – which means that the demand from buyers is always exceeding the current supply of homes for sale.
As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached are the most common housing units in Denver. Other types of housing that are prevalent in Denver include large apartment complexes, duplexes, rowhouses, and homes converted to apartments. Single-family homes account for about 40-45% of Denver’s housing units.
The year 2020 began very much still in favor of sellers for the Denver Housing Market. By the end of 2020, the house prices in Denver were expected to rise by 2 to 3 percent, which meant it was likely to be another year of affordability crisis for buyers. The residential real estate market in Denver continues to churn unimpeded even in the times of COVID-19.
In January 2020, we saw a massive gain in the inventory in the Denver metro housing market. New listings increased by a massive 89.27 percent from the month prior. Active listings dropped by a 1.91 percent drop from December because home buyers placed 43 percent more homes in pending status month over month which diminished the housing inventory surplus.
In the entire residential market, there was a 34.21 percent drop in the number of closed homes and a 35.19 percent drop in sales volume month over month in January which was a reflection of the lower end of 2019. As usually occurs this time of year, the days on the market were longer, averaging out to 45 compared to 41 in December. The average single-family home price was down from its summer highs, but higher year over year by 6.86 percent to $532,494.
The picture is a little different for condos that experienced a 4.98 percent month-over-month drop in average price to $355,754, which is also down 0.37 percent from the same month last year; representing the first price drop in January in at least the past four years. After a remaining almost flat throughout 2019, with a mere 1% rise in prices, the Denver housing market was showing little signs of gains.
In March 2o20, the Denver Metro housing market was showing signs of being one of the best on record. However, amid fears stemming from the ongoing pandemic, there were an unprecedented 761 home sellers that withdrew their homes from the metro-Denver real estate market in March.
The largest number of homes, 625, was removed in the last two weeks of March. All price ranges in the Denver metro area were still signs of a warm seller’s market. In March, 30.24% more new listings came on the market, which pushed the number of active listings at month’s end up 19.46 percent to 5,776. Notably, that is 8.20 percent fewer active listings than March 2019.
Homes in the Denver housing market were selling at an average of 29 days. The trend for average days on the market had gone down since last month. The number of pending contracts increased by 8.03% MTM, and there were 12.02% more homes sold. In March 2020, the average sale price for all residential single-family homes (attached plus detached) was $513,526, up 7.31% since March 2019 – setting a new record high.
It was also the first time the average sale price for both single-family homes and condos topped the half-million-dollar mark. The highest number of sales were in the $500,000 to $749,000 range.
Impact of COVID-19 on the Denver Housing Market
Despite the pandemic, home prices going up. According to Dmarealtors.com, in March, pre-COVID-19, the average price for a residential property in the 11-county metro Denver area zoomed above $500,000 for the first time, to $513,535. That price then dipped back down below the half-million-dollar mark during the home-showing shutdown and uncertain economic times in April and May.
In April, the median sales price of all residential properties increased by 2.56 percent to $400,000. The dollar volume of all home sales in April was around $1.8 Billion, a year-over-year decrease of 29.7%. There remained about a month’s supply of residential single-family homes (attached plus detached) in the price range of $300,000 to $499,999. (We are mainly going to focus on this housing market segment).
Furthermore, the Classic Market segment continued to sell for remarkably high percentages of the list price. In April 2020, the average sales price for the attached properties was $370,011, a 0.22 percent increase over April 2019. The average sales price for detached properties increasing by 1.97 percent since April 2019.
The average sales price of all properties (attached plus detached) was $400,232, a 1.45 per-cent higher than last April. April 2020 finished with a 100.50 percent close-price-to-list-price ratio for combined residential, a small increase over March, and a nearly half percent increase year over year.
In the Denver Metro Area this May, 3,437 homes closed, a year-over-year decrease of 44%. As compared to last month, sales saw a 13% decrease. In May, the count of listings in Pending status was 6,935, which is 119% more than last month and up 14%, from May 2019. Extremely low amounts of inventory helped sellers to move their properties quickly in the $300,000 to $399,000 price range.
The average price of a home in the Denver metro area was $502,441, a year-over-year increase of less than 1%. Compared to April, there was also an increase of less than 1%. Single-family residences sold for an average price of $542,479, down 2% year over year.
The price of multi-family and condos was up 4% from May 2019, at an average of $394,670. At the end of May, there were about 2.1-months (9 weeks) of inventory on the market, two weeks more than last month, and three weeks more than last year.
According to REcolorado’s (state’s largest network of real estate professionals) June 2020 report, the average price of a home in the Denver metro area was $508,951, a year-over-year increase of 2%. Compared to last month, there was an increase of 3%. 5,992 homes were closed, a year-over-year increase of 3%.
As compared to last month, sales saw a 69% increase. Single-family residences sold for an average price of $559,290, an increase of 2% year over year. The price of multi-family/ condos/townhomes was up 1% from June 2019, at an average of $370,180.
According to their July 2020 report, the average price of a home in the Denver metro area in July was $539,340, a year-over-year increase of 9%. As compared to last month, prices were 6% higher. A record number of homes sold in the Denver Metro area. Throughout the month, 7,186 homes closed a year-over-year increase of 21% and a 16% increase month over month. Single-family residences sold for an average price of $599,463, a 10% year-over-year increase.
The average price of multi-family/ condos/townhomes was $383,764, up 6% year over year. There was a record number of homes sold in August as compared to this month in previous years. July 2020 had hit a record high number of home sales in any given month in the Metro Denver real estate market. As compared to July, home sales dropped by 13% in August. However, home sales increased by 12% year-over-year, as reported by REcolorado®.
Several key housing indicators showed year-over-year gains as more buyers entered the market in August. The factors driving prices up are an increase in demand for housing, tight inventory, and record-low mortgage rates. The average price of a home in the Denver metro area in August was $539,252, a year-over-year increase of 11%.
As compared to July, prices saw a marginal increase. Home price increases were driven by Single-family residences, which sold for an average price of $602,191, a 13% year-over-year increase. This is the first time prices for single-family homes have surpassed $600,000.
New listings in August were 5.88% lower than this time last year where year-to-date new listings are down by 9.85%. The closed to list price ratio for all residential properties in this segment was 100,74%.
October continued to defy the cooling trend of the winter season as new records were broken by both buyers and sellers. This trend is largely driven by low-interest rates. Denver and the entire metro area remains a seller’s real estate market, especially in the $300,000 to $399,000 price range where it’s getting even more difficult for buyers to compete.
The previous high in October was in 2019 at $2,487,936,752. July of 2020 was the record at $3,965,805,480. Detached homes are the preference for many homebuyers today. In the last month, there was a record-high for the average sales price for both single-family detached and attached properties at $625,100 and $393,733 respectively, according to the Denver Metro Association of Realtors.
The median closing price on a single-family home was $519,900 in October, an increase of 1.9% from September and 14.3% over the past year. The average closing price was $625,100, a 4.5% gain from September, and an 18% increase over the past year. October also saw a record-low of months of inventory at an astonishing 0.81.
***The latest market report and trends (November 2020) have already been discussed above***
Denver Real Estate Foreclosure Statistics
Here are some foreclosure statistics of Denver, CO. Colorado has had the lowest rate of mortgage delinquencies in any state of the United States. Combined with rising home prices, a strong economy, and a robust job market, these factors have all helped keep a lid on mortgage delinquencies – “Black Knight.”
According to Zillow’s data, in Denver 0.2 homes are foreclosed (per 10,000). This is greater than the Denver-Aurora-Lakewood Metro value of 0.1 and also lower than the national value of 1.2. The percent of delinquent mortgages in Denver is 0.4%, which is lower than the national value of 1.1%. The percent of Denver homeowners underwater on their mortgage is 4.7%, which is higher than Denver-Aurora-Lakewood Metro at 3.9%.
There are currently 272 properties in Denver, CO that are in some stage of foreclosure (default, auction, or bank-owned) while the number of homes listed for sale on RealtyTrac is 320. In August, the number of properties that received a foreclosure filing in Denver, CO was 25% lower than the previous month and 89% lower than the same time last year.
Currently, in Denver, the zip code with the highest foreclosure rate is 80224, where 1 in every 8751 housing units is foreclosed. So, you’d find a lot of distressed sellers in this area and get some discounted off-market deals. 80222 zip code has the lowest foreclosure rate, where 1 in every 11068 housing units becomes delinquent.
Potential Foreclosures in Denver
272 (RealtyTrac)
Homes for Sale in Denver
320
Recently Sold
11,299
Median List Price
$399,999 (0% drop vs July 2019)
Denver Real Estate Market: Is It A Good Place For Investment?
Should you consider Denver real estate investment? Many real estate investors have asked themselves if buying a property in Denver is a good investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2021. Denver ranked 13th for overall real estate investment and development, according to some 3,000 industry professionals surveyed and interviewed by the Urban Land Institute and PwC.
Survey respondents viewed Denver’s housing market even more favorably, collectively ranking it ninth overall. Of greater importance to real estate investors in Denver is that the area is growing in population. The jobs are increasing and so are the number of renters. It is the largest and capital city of Colorado, home to roughly 700,000 people. The Denver metropolitan area is home to around 2.7 million people. The population has increased by 1.33% from 2019. The Denver-Aurora, Colorado statistical area is home to about three and a half million people.
It has a low unemployment rate of 2.3% as of Dec 2019, according to the U.S. Bureau of Labor Statistics. A third of the population of the Denver-metro area rents. All these are excellent signs of investors looking to buy a rental property in Denver. Despite recent cooling off, there are several reasons to consider long term investment in the Denver real estate market. Shortage of housing for a growing population, a strong economy & increasing jobs have been fueling the demand in the Denver housing market for the past many years.
Denver is a key trade point for the country, and home to several large corporations in the central United States. It was named 6th on Forbes Magazine’s “Best Places for Business and Careers.” Denver South is home to 7 Fortune 500 companies. It is also home to mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy.
Let’s take a look at the number of positive things going on in the Denver real estate market which can help investors who are keen to buy an investment property in this city. We’ll address the biggest factor pulling people to the Denver housing market next.
Denver’s Limited Room to Grow
Many of the fastest-growing markets in the US are along the Front Range, a part of the Southern Rocky Mountains. While there are houses in the hills, it is a lot harder to build on the mountainous landscape than on flat plains. In Denver’s case, the massive national forests and Rocky Mountain Park to the west of Denver and its suburbs prevent the expansion of the Denver housing market in that direction. This keeps home prices higher than they’d be in places like Dallas.
The residential median home price in Denver hovers around $475,000 as of October 2020. That’s a steal for the migrants from California, but the sheer numbers of them coming in is pricing locals out of the housing market. The median monthly rent here – and that includes one-bedroom apartments – is around $1100 a month.
Note that you could get much more for a spacious single-family home for rent or a large condo. With a 3 bedroom detached single-family home, you could receive well over $2000 per month in rent. You’ll find strong ROI numbers for the Denver real estate market.
Denver’s Quality of Life
We can joke about the people who moved to Colorado decades ago, inspired by the movie “Rocky Mountain High”. We’re not going to joke about the over-hyped medical marijuana industry there today. U.S. News & World Report published its list of the “150 Best Places to Live in the U.S.,” and four of the top five cities are right here in Colorado: Boulder (1), Denver (2), Colorado Springs (4), and Fort Collins (5). Denver was the second-best city to live in that list.
The area was a little lower on value than many like, but it ranked high on jobs, quality of life, and desirability. It is a beautiful city to live near the mountains – located on the western edge of the exquisitely beautiful High Plains. It is exactly one mile high above sea level and has the largest city park system in the nation, with 14,000 acres of mountain parks and 2,500 acres of natural areas.
That isn’t enough on its own to draw huge numbers of people to the Denver real estate market, but it is a factor. It has become the 19th-most populous city in the nation. The current metro area population of Denver in 2020 is 2,827,000, a 1.33% increase from 2019 (Macrotrends.net).
Denver was ranked as a Beta world city by the Globalization and World Cities Research Network. It has been one of the fastest-growing major cities in the United States, and real estate investments provide a direct way to participate in the strong growth of these economies. The strength of the overall economy significantly impacts the real estate market.
Denver’s Strong Economy & Jobs Boost Its Real Estate Market
Job growth directly affects the real estate market. Demand for all types of real estate increases with the number of local jobs, as during periods of economic development or boom. Jobs are a major reason why people move to Denver in the first place. The Denver area’s unemployment rate is less than 3%.
Denver’s unemployment rate has been well below the national average for years. The unemployment rate was 2.3% as of Dec 2019, according to the U.S. Bureau of Labor Statistics. The average weekly wages for all industries in Denver Area are $1,265 (the U.S. = $1,093). That explains why Denver is one of the top cities for in-migration, attracting people from all over the state as well as the country.
Due to its proximity to the mineral-rich Rocky Mountains, Denver has long been a home for mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy. The top 25 employers in Metro Denver include government and municipal organizations, and corporations.
Denver Technological Center, better known as The Denver Tech Center or DTC, is a business and economic trading center located in Colorado in the southeastern portion of the Denver Metropolitan Area, within portions of the cities of Denver and Greenwood Village.
It is home to several major businesses and corporations. The U.S. Government is the largest employer in Metro Denver. The Department of the Interior includes such agencies as the Bureau of Land Management, Office of Surface Mining and Reclamation, Bureau of Reclamation and all have offices in or near the Denver Metro area. Another top employer in the Denver Metro Area is the State of Colorado.
It employs nearly 30,000 people in the Denver Metro area. As the capital and largest city in the state, Denver hosts the State of Colorado in multiple locations. Centura Health is one of the top 25 employers for the metro Denver area. Its massive health care network includes 15 hospitals, eight affiliate hospitals, health neighborhoods, health at home, urgent care centers, emergency centers, mountain clinics, 100 plus physician practices, and clinics and Flight for Life Colorado.
Denver’s The Strong Tourism Market
Denver is well known for its proximity to the Rockies. Other attractions in the area include but are not limited to the Denver Zoo and the Denver Botanic Gardens. Many of those 30 million tourists would love to have rented a house or apartment for their visit instead of a hotel. Then there’s the business traveler. Denver hosts around 80 conventions a year, too.
Whether someone is staying for a week for a convention or working a contract job in the tourism industry, this drives demand for short-term rentals that can be incredibly profitable. Renting on sites like Airbnb is legal if you have a business license, though around half of the Airbnb rentals are thought to be violating that rule. Denver is particularly progressive with allowing people to rent out their homes and apartments on Airbnb, though landlords may not agree with it.
Known Areas of Redevelopment
You don’t want to invest in the Denver housing market and end up losing money because the neighborhood is going downhill. Conversely, areas slated for redevelopment will almost certainly go up. And Denver has known and planned for areas of redevelopment. Downtown Denver saw multiple infill projects downtown ten years ago. Redevelopment is planned around Elitch Gardens today.
Key trade point for the country – Denver is home to several large corporations in the central United States. Denver South is home to 7 Fortune 500 companies. Denver was named 6th on Forbes Magazine’s “Best Places for Business and Careers.” Home for mining and energy companies such as Halliburton, Smith International, Newmont Mining, and Noble Energy.
Denver’s Demographic Momentum
At first glance, the average age of 36 for residents versus 40 for the national average doesn’t sound too promising. However, this long-established city has already been noted as a great place to retire. That pulls the average age up. The coolness factor and job market attract equal numbers of young adults. That is why Millennials make up about 22% of Denver’s population.
And given the job market and quality of life, they’ll probably stay here to raise families, generating more demand for the Denver housing market. Generation X made that decision, too, which is why roughly a quarter of residents are under the age of 20. Additions to the local labor force tend to drive rents and prices up on properties in the vicinity and results in local construction of homes and apartments. That will propel the Denver real estate market for decades to come.
Denver Rental Market is Very Big
A third of the Denver-metro area rents. Since housing inventory is scarce, prices are going up much faster than wages, and the younger population is more comfortable renting than owning, the Denver housing market is seeing a rapid rise in its rental market. The sheer demand for housing stock is making it profitable to break up large homes into multiple apartments.
If Forbes could recommend this as a Denver real estate market investment strategy in 2016, it can be seriously considered today. They said that any single-family home in the Denver housing market could be considered a good rental property due to the rapid rise in home prices.
Denver Has A Large Student Population For Rental Homes. The college market presents a unique opportunity for landlords. There is a constant stream of people who will only rent unless they choose to stay after graduation. They may rent a while longer before feeling secure enough to buy a house.
Buying investment real estate in a college town is high-risk. After all, when a college like Evergreen State scares off students or simply fails to attract them like many classics, private liberal arts schools who found themselves rendered redundant after brand name schools opened their doors, there’s less demand for the rental of the house as a permanent residence.
You don’t have that problem in Denver since there are so many colleges in the Denver area. Schools range from the massive community college network to the 400 student Bel-Rea Institute of Animal Technology. American Sentinel University in Aurora is home to 2600 students, while the Metropolitan State College of Denver has more than 20,000 students.
The Colorado School of Healing Arts has only 100 students, while Colorado Christian University has more than 7000. Yes, the Denver real estate market for those who want to cater to students is diverse. You could invest in rental real estate near any of these colleges, knowing you could rent or sell to people that simply want to live in the area if student demand slacks off.
Denver Rental Trends: According to RENTCafe, 51% of the households in Denver, CO are renter-occupied while 48% are owner-occupied. The average size for a Denver, CO apartment is 842 square feet with studio apartments are the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage. 36% of the apartments fall in the price range of $1,501-$2,000 while 40% fall in the price range of $1,001-$1,500.
As of November 2020, the average rent for an apartment in Denver, CO is $1608 which is a 7.59% decrease from last year when the average rent was $1730, and a 0.81% decrease from last month when the average rent was $1621
One-bedroom apartments in Denver rent for $1423 a month on average (a 7.8% decrease from last year).
Two-bedroom apartment rents average $1813 (a 6.23% decrease from last year).
The average apartment rent over the prior 6 months in Denver has decreased by $31 (-1.9%).
One-bedroom units have decreased by $26 (-1.8%).
Two-bedroom apartments have decreased by $21 (-1.1%).
The most affordable neighborhoods where the asking prices are below the average Denver rent are:
Barnum, where the average rent goes for $1,010/month.
Mar Lee, where renters pay $1,010/mo on average.
Westwood, where the average rent goes for $1,010/mo.
Chaffee Park, where the average rent goes for $1,218/mo.
Regis, where the average rent goes for $1,277/mo.
Harvey Park South, where the average rent goes for $1,279/mo.
Courtesy of RENTCafe.com
Denver Is Relatively Landlord-Friendly
Colorado is relatively landlord-friendly; compare it to the West coast, and it is a landlord’s dream. You don’t have to give tenants notice that you’re entering a property. You can quickly begin evictions if they haven’t paid the rent. That protects your investment in the Denver housing market. There’s no limit on late fees. There are no state laws that prevent you from rekeying the locks after evicting them. If they violate the lease, give them formal notice. The tenants then have 72 hours to correct the issue or move out. If they don’t comply with notices, then you can go to court. If the court agrees with you, the sheriff gives the tenants 48 hours to move out before forcing them out.
Denver Colorado Real Estate Investment Markets
Investing in Denver’s real estate can be a worthy investment due to a steady rate of appreciation. There are many reasons why the Denver real estate market is going strong today and certain to remain strong for years to come. You cannot afford to miss out on this growing and appreciating real estate market. Good cash flow from Denver investment properties means the investment is, needless to say, profitable.
A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Denver real estate investment opportunity would be key to your success. Even as Denver home prices have reached new heights, the market remains attractive to residential real estate investors in the $300,000 to $399,000 price range. As they continue to compete for potential investment properties at the lower end of the market, the challenges for first-time homebuyers will remain.
The homebuyers won’t be able to outbid real estate investors and would end up renting. The high prices combined with the lack of higher gains have slowed down fixing and flipping investment properties in Denver. The best investment is now looking for a rental property that will generate good cash flow. Your best tenants would be the retirees who intend to relocate to Denver and want to purchase property to rent out. The three most important factors when buying real estate anywhere are location, location, and location.
The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Denver investment property and you should be able to flip it for a lump sum profit. The neighborhoods in Denver must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls.
Some of the popular neighborhoods for buying a house or an investment property in Denver are Jefferson Park, Berkeley, Park Hill, Cheesman Park, Congress Park, Hilltop, Sunnyside, Capitol Hill, Highland, Platte Park, Stapleton, Reunion, Cherry Creek, Aspen, and Washington Park.
Denver housing prices are not only among the most expensive in Colorado but they are also some of the most expensive in all of the United States. It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals such as duplex and triplex in Class A neighborhoods. As with any real estate purchase, act wisely. Evaluate the specifics of the Denver housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Denver.
The inventory is low, but opportunities are there. According to Realtor.com, there are 69 neighborhoods in Denver, where properties are available for sale. Washington Park has a median listing price of $1.2M, making it the most expensive neighborhood. Capitol Hill is the most affordable neighborhood, with a median listing price of $310K.
The asking price of Denver single-family homes (on Realtor.com) starts from $45,000 and can go up to $6.6M for a luxury property located in the East Denver neighborhood. Another popular neighborhood and expensive neighborhood in Denver is Cherry Creek where the median home price is around $898,000. The home values in Cherry Creek have risen by 0.2 % over the past 12 months. For buyers, the good thing is that this area has cooled off. There are more than enough homes for sale to meet the demand.
If you think of investing in Denver, you have decided on a long-term investment property. Here are the ten neighborhoods in Denver having the highest real estate appreciation rates since 2000—List by Neigborhoodscout.com.
Sandown
Smith Rd / Havana St
W Colfax Ave / Irving St
Yeshiva Toras Chaim Talmudical Seminary / W Colfax Ave
W Colfax Ave / Broadway
Santa Fe Dr / W 8th Ave
Metropolitan State College of Denver / Wazee St
E 35th Ave / York St
E 26th Ave / York St
Larimer St / Broadway
Colorado Springs is another sizzling hot market for real estate investment in 2020. The Colorado Springs real estate market contains several large populations of renters, many practical reasons for people to move here from the surrounding area and across the country, and long-term factors that will drive growth for years to come. Forget the Mile High City and invest in the Colorado Springs real estate market.
Aurora is a fairly large city on the east side of Denver. Its proximity to Denver has long kept it in the realm of the Denver suburb. The Aurora real estate market 2020 is seeing rising prices & rents. Aurora, Colorado is more than a growing suburb. It is a large, thriving city in its own right. It has a bright future, and it is poised for rapid appreciation and increasing rental rates. This is a good time to invest in the Aurora real estate market.
Boulder real estate market is another good place to buy investment properties. Boulder is located in northern Colorado. The Boulder metro area is becoming a high-tech hub, driving up rental rates and property values. Others are lured here by the promise of high paying jobs or attending school somewhere they can intern at Big Tech firms without paying a fortune. Boulder’s economy is stabilized by the presence of government research institutes and the proximity to Denver’s buzzing economy.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Denver, Colorado.
Consult with one of the investment counselors who can help build you a custom portfolio of Denver turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Denver.
Not just limited to Denver or Colorado but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Denver turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
Is It The Right Time To Invest In Real Estate? – The national homeownership rate is on the decline for the first time since 2017. As demographics change and baby boomers retire, you’re seeing Millennials who may not be ready to buy houses. In 2018, Millennials made up about 22 percent of the population in the United States. They’re choosing to rent over buying a single-family home or an apartment. Rising home prices and shortage of starter homes have not left Millennials many choices but to delay homeownership. Moreover, it’s even harder to take out a mortgage for those who have student loan debt.
Let us know which real estate markets in the United States you consider best for real estate investing!
Please do not make any real estate or financial decisions based solely on the information found within this article. Some of the information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US. This article aimed to educate investors who are keen to invest in Denver real estate. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend doing your research and take the help of a real estate investment counselor.
REFERENCES:
Market Data, Reports & Forecasts
https://www.recolorado.com
https://www.dmarealtors.com
https://www.zillow.com/denver-co/home-values
https://www.littlebighomes.com/real-estate-denver.html
https://www.recolorado.com/market-statistics/market-watch.aspx
https://www.realtor.com/realestateandhomes-search/Denver_CO/overview
Best Neighborhoods for real estate
https://www.neighborhoodscout.com/co/denver/real-estate
Foreclosures
https://www.realtytrac.com/statsandtrends/co/denver-county/denver
Quality of life, Unemployment, Rent, Tourism
https://realestate.usnews.com/places/colorado/denver
Landlord friendly
http://www.landlordstation.com/blog/top-landlord-friendly-states
https://www.avail.co/education/laws/colorado-landlord-tenant-law
Short term rentals
50% of Airbnb landlords ignore Denver rules in booming $100M industry
Growing rental market
Everything You Know About Denver’s Real Estate Market Is Wrong
https://www.forbes.com/sites/ingowinzer/2016/07/31/should-you-invest-in-denver-area-real-estate/#16f926277fc5
Redevelopment
https://denverinfill.com/home-old.htm
Colleges
https://www.collegesimply.com/colleges-near/colorado/denver
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