A Positive but tempered outlook for Denver real estate.
Projecting what will happen in the real estate market is a bit like predicting the weather. Many factors both on the local, national and international levels can have significant impact in short order. Having said that there are many barometers we can look at that are reliable predictors for the local housing market. With that being said here is my 2020 Real Estate Outlook for Denver, Washington Park, Platt Park and all the classic neighborhoods.
After eight years of strong steady appreciation we saw a leveling off in home values in 2019. Will that turn in the market carry over through 2020? In short, I believe prices will continue to level off this year but I don’t expect them to fall. There is not a bubble waiting to pop here. Let me offer a few reasons why:
- US News ranked Denver #2 in Best Places to Live, citing such factors as Desirability, Value, Job Market, Quality of life to name a few. That’s why Denver population forecasts seems locked in an ever upward trend. More people translate to the need for more housing which ultimately keeps sales and prices strong. US News Report
- For the third year in a row US News ranked Colorado’s economy as #1 in the US. Let me say that again, #1 in out of all fifty states. The strong economy translates to strong wages which fuel people’s ability to be home buyers. #1 Economy
- Denver’s median age is 34.6. Millennials are projected to be the strongest buyer pool in history and Denver has a lot of them. We are just seeing that demographic entering their peak earning years and as they do the buyer pool will continue to grow significantly creating more upward pressure on housing. US Census Report for Denver
- Denver beat almost every other city in the US in income growth in the past 5 years according to recent figures released by the U.S. Census Bureau. Its true home values have increased significantly in the last decade but so have wages.
- Denver and Colorado’s population keeps growing. In the past year Colorado’s population increased 1.2% which translates to a growth of 67,449 people. While not the strongest year of growth in the last decade it is reflective of the continuous upward trend of for the state. Every predictor of growth for Colorado shows steady population increase till 2030 and beyond. The majority of that growth lands in Denver and the front range. More people means the need for more housing. Colorado Population Growth
When we dial all that down and look at the impact on local neighborhoods like Platt Park, Washington Park, The Highlands and the like the effects are profound. In all the classic neighborhoods of Denver there is not much room to add housing stock. What is currently in place is, for the most part what will remain. As the buyer pool grows the number of homes in these neighborhoods is not. That creates a supply and demand issue that will continue to put upward pressure on home values.
I used to marvel at coastal cities where a simple bungalow was worth $1,000,000 or more dollars. As recently as 15 years ago a Denver bungalow on average sold in the mid-$200,000 range. Today that number is in the mid-$600,000 range. The days of million-dollar bungalows are not terribly far off on the horizon.
What does all this hold for the short term? For the present home values have outpaced wage growth so the market needs to cool it jets a bit to let wages catch up as it did in 2019. I expect 2020 to be largely a repeat of last year—a solid market but slow-to-little appreciation which for the short term is a very healthy thing. Additionally I’d add, with this being an election year there is historically a bit of heightened timidity amongst buyers in such years. That will also contribute to prices staying somewhat in check.
If you are in the market for a home then this is a great year to do so. Interest rates are sub-4% for a 30-year mortgage. Competition for homes will not likely be as aggressive as we’ve seen in years past–a welcome relief for buyers. Also, a great bonus of this year is if you are in the position of needing to sell and then purchase a new home the environment for such has not been better in the past decade. The market for selling is still strong but you should find more inventory when ready to purchase.
We’d love to help you with all this. Give us a call when you are ready and we’ll put our expertise to work for you!
See you around the neighborhood.
Tom & Denise Snyder