If you are trying to make sense of the housing market in the Denver area these days, you are far from alone. There is a surge of people moving to Colorful Colorado and many speculations on ‘why’. Could it be the promised 300+ days of sunshine? The legalization of marijuana? Or the job market that is on the mend? The numbers are clear: For one reason or another, the Denver Metro area is currently one of the hottest housing markets in the nation.
Let’s break it down.
Balanced Market: A balanced real estate market means that there is a 5-6 month supply of homes on the market. Currently in Denver, there is a 2 month supply of homes on the market. Much of the inventory that hits the market is selling in record time and way above asking price.
Increase in Home Values: Denver home values increased by 17.2% in the first quarter of 2015. The median home price increased from $288,400 in the first quarter of 2014 to $338, 100 in the first quarter of 2015. Nationally, home prices raised 7.4% to $205,000 during the same time period. Denver’s median home price is now 65% more expensive than the national average, but median income is only 18% higher than the national average. It doesn’t stop there. According to Aldo Svaldi, a Denver Post reporter: “The average price for a single-family detached home sold in metro Denver went above $400,000 for the first time ever in April, reaching $402,302. That was up 11 percent from last year and 3 percent higher than in March.”
Denver Growth: And Denver continues to flourish…Denver ranked 7th out of 178 cities for home appreciation. The 6 other cities with faster appreciation than Denver had much lower home prices:
Rental Market: Home sales are only part of the real estate conundrum in Colorado. What about the rental reality? USA today reported that the median U.S. rent climbed 4% in April from the year-ago period to $1,364, according to real estate database Zillow. That’s the biggest jump since March 2013. In April, Aurora had continued to hold on to the number one spot for percentage of rent increases out of 100 other cities tracked by San Francisco based Apartment List. Denver held the number 4 spot. Due to an extremely low 4.8% vacancy rate and high demand, it has definitely been a landlord market as Metro Denver has had a 9% annual increase in rents.
Where does this housing market leave the younger generations? You would think that the new found inflation in home prices would deter new buyers from entering the market. But due to the rental market being just as crazy, it is forecasted to be different than expected. “Lawrence Yun, chief economist of the National Association of Realtors, expects the share of first-time home buyers to rise to 33% by year-end, in part because of the financial benefits of home ownership vs. renting.” Once again, highlighting that it is also a seller’s market.
To take advantage of increased home prices, many have jumped on the bandwagon to sell their homes and have made a hefty profit in doing so. Unfortunately, many people who are selling their homes and deciding to stay in Denver are finding themselves in quite a dilemma. Most homes are selling much quicker than anticipated by the sellers and the brutal reality of inventory to rent or buy is that of an ice sale in hell. If you are one of the lucky ones to have a bid accepted or to receive a lease on a home, you are probably spending $25,000 more than asking price or your rent payment is twice that of your old mortgage payment.
All in all, the real estate market in the Denver Metro area is said to be a great testimony for the economy, but a stressful reality for many. Either way, for the time being, it is a great time to be a seller or a landlord.
Please contact one of our TJC Neighborhood Realtors for expert advice on buying, selling, investing, or renting your home. Most people would agree that the price you have to pay to live in Colorado is very well paid back in sunshine and mountain views.
Brought to you by Sondra Lockett-Cameron, Marketing Coordinator for TJC Real Estate and Management Services.
TJC Real Estate & Management Services • 303.324.6988 • info@tjcrealestate.com
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References
http://www.coloradorealtors.com
http://www.denverpost.com/business/ci_27890578/aurora-rents-zoomed-up-faster-than-any-other
http://www.9news.com/story/money/2015/05/17/national-rents-rising/27372141/
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