From this time last year, median house prices have risen 11.5%, to $723,750, in metro Denver metro, according to the latest Market Trends Report from the Colorado Association of Realtors. In normal times, that would be a hefty hike. But it’s nothing compared to recent years, when home prices have been rising around 20%, from one year to the next.
The story about condos and townhomes in Denver is slightly different. Prices are down by 3.3% to $435,000, since July 2021.
The slower rate of rising prices on houses and the slight drop on condos and townhomes has some sellers panicked that the proverbial bubble has popped, prices will soon be plummeting, and their mortgages could be upside down — meaning they owe more on their homes than they could make selling them.
The real estate company RedFin recently ranked Denver in the top 50% of the nation’s most vulnerable housing markets.
Is it right to panic?
“That’s just not the case,” realtor Matthew Leprino said. “Things have leveled out. Things have calmed down. The best analogy I can give you is that the market just took a huge, deep breath. It’s a very stable time, more so than it has been in a while.”
Yet he understands that stability may feel like a crisis for home sellers in a city that has been high on high prices for years. After all, they might have to wait a few weeks, offer incentives to buyers and even reduce the price in hopes of selling in this more competitive market.
Currently, with 856 single-family homes available in the metro area, there is a 1.3 month supply, which is up from the one-month supply available at the end of July 2021 or the 0.3 month supply available in February.
Will prices go up or down?
“The very most succinct answer I can give you is: Who in the hell knows?” Leprino said. “I think there’s any number of factors that affect that. I mean, political climates, economic climates. Is Russia going to continue to hang out in Ukraine? There’s any number of factors that go on with that. What I will say is this: I think we are on such a profound ascent, both in price and competitiveness. We’ve leveled out now.”
We probably won’t see a repeat of the 2008 foreclosure crisis, he said.
“You had lending where no documentation was required whatsoever,” he said. “Now, the lending environment is so much more stringent and so much more documentation is required. It is nowhere near as easy to get loan as it once was… They’re not lending to people who have a low likelihood of paying it back. In 2008, people could say ‘Yeah, sure, I make $250,000,’ with no proof and get a loan that required 250,000 year income to satisfy the debt. So that’s the main difference. Lending is just such a drastically different entity now.”
He doubts prices will start spiking like they have been going into last summer.
“Those prices were going up 20% year over year, and now they’re at 11%,” he said. “I don’t think we can go back up into that kind of assent right now, anytime soon.”